Why don't you use an accounting software?
A "proper" accounting system will decrease your stress in managing your company
BRUCE LAISTER
Last Update 9 months ago
Having entered the truly global village recently, I have come across (too) many businesses that don't use accounting software but use other systems instead.
As an accountant, I realise that I will always say that you must use an accounting system based on accounting principles, of which there are surprisingly few actually.
With the technology available, my advice to anyone is to go with an online system. The benefits far outweigh the desktop versions of the programs. The best system is always going to be the one you use but the first systems I support (in no order of preference) are Xero, Sage and QuickBooks.**
The basic structure of an accounting system is based on a central cash book. A cashbook is a system where the transactions that occur in the bank statement are processed into the accounting system. The bank account is where everything happens. It is crucial for accurate reports. The cash book includes both income and expenses.
As I go through the list below, I shudder to think that business owners would use these options willingly.
PayPal or Stripe (or any other system like this)**
The platforms are primarily processing platforms designed to manage and facilitate online transactions. They do provide some reporting features and income tracking features too. However, they are NOT accounting systems. They lack the cash book.
Free accounting systems**
Everyone is wanting to save money, as do I. However, free does not mean good. I have to say that paid does not mean good either. These systems could be okay but I would say that they are not up to scratch. These systems are often lacking the cash book but sometimes do include it. The issue I have with these is the likelihood of the latest update for tax or international accounting laws are not as good as others.
Excel (or the like)**
This is the most scary of the lot. I cannot believe that this is still so popular but that's my opinion. The biggest issue I have with Excel or the like is not only the lack of cash book but the huge influence of human error. We are all human and we make mistakes. I do too. Excel has no safeguards built into it in the code itself as the accounting systems do.
As much as I know that there Excel geniuses out there and they can code brilliantly and hugely impressive spreadsheets, there are still problems with the basic structure. If there is a small formula error in one sheet, it will pull through in others and can cause failure or massive calculation errors.
Why go to a "proper" accounting system?
This is very simple to me. It is the fact that they simply save time by having processes in place to limit human error. I often, "there is nothing that you can do that will brake the accounting software." They have support systems in place that will get you up and running in the fastest timeframe possible. The others will not have the same support for this. Excel will cost you a lot of time to find the error and then fix it, if you can at all. That time is worth money, money you could have spent earning money.
Yes, this is my opinion but I have been witness to systems causing big, big problems. The systems fail and then the data is lost or corrupted and this leads to huge issues with the tax authority, possibly resulting in penalties and fines.
Bruce is an accountant with 18 years of experience with accounting systems both offline and online. Contact him on [email protected]
**This is a strictly personal and professional opinion and I do not say that they cannot work to produce accurate reports. All I say is that they are not complete as an accounting system and they do not promote themselves as such.