Episode 31
Welcome to Part 2 of the Online Accounting Software episode. Last week I talked about the pros and cons of online accounting software, and I realized after getting email from a listener, that I didn’t talk about one of the most important things to think about when using any online product. And that is – ‘The Terms and Conditions’ which most people just click YES--- because if you don’t, you can’t log in to the program and use it. With most online accounting programs, not only does the data belong to the software company, but since names of vendors and customers sit on their server or servers, they can use the names for marketing purposes. Their marketing, not yours. Read the ‘Terms and Conditions’ if you have the time (most are relatively lengthy) and know and understand what you are getting into when using software that you use online. Also, even if you do purchase a desktop version of a piece of software, there are ‘Terms and Conditions’ as well. Take a listen to Episode 3 which is the first time I talk about computerized accounting software and the episode that was released 2 weeks ago which is Part 1 of this two-part episode on accounting software. (This was the longest introduction in the history of this podcast, but as usual, I digress). I’m Paul Rosenblum.
In the United States, QuickBooks Online (or QBO) is the most popular online accounting software, but it’s not a ‘one-size-fits-all’ program at all. There are other options, depending on your situation.
I am seeing more “A-La carte” accounting software now than full function software. Before deciding on an online accounting software, as a business owner, you should ask yourself-- who is doing the bookkeeping, do YOU need to be in your books, how many set of hands are in your books, and one of the most important – what is your budget for online accounting software? QBO for the most popular version is around $90 a month, although they do have options that are less money (with less features and reports, of course). Again, there ARE other options.
Before I begin, I want to make it clear, that I am not endorsing any specific product here, and I have had no contact with any software company that I will talk about, but I will introduce some of the products that I have looked at and that stood out in my mind. So, here we go: (And by the way, the links will be provided underneath this episode and in the next newsletter, so sign up for that!)
Zoho.com – They have four levels of their software. Their ‘Standard’ edition if around $15.00 monthly (billed annually), and includes 3 users, the ability to invoice customers, accept online payments, and a big one—accounts for projects and timesheets, and of course reporting. It’s really a full “Accounts Receivable” edition.
And Why would you want an A/R edition only you ask? The answer – When you have a remote bookkeeper putting together everything for taxes and for the accountant, and for compliance with the tax agencies, AND your company is on a cash basis with the IRS, there’s no real reason to have customer invoices in the same database that your bookkeeper is working in. I have a client (for one example) who does their own invoicing, they accept payments from customers in their edition of Zoho and the accounts receivable person is in-house. (Not me by the way, although my first part time bookkeeping job was in A/R and I loved it, but I digress as usual). At $180.00 a year, it’s an affordable way to keep track of your A/R with all the functions that most businesses need with the limit of 100 customers.
They also have an edition that’s around $39.00 per month billed annually—that includes 500 invoices per month, multi-currency if you do business with customers using other than the U.S. dollar, along with a transaction approval process which would be a great feature as you grow your business.
Their ‘Premium’ for around $79 monthly (billed annually), gives you even more with 25 customizable reports, as well as custom domains and sending consolidated invoices. Search for “Zoho Pricing Plans” on your favorite search mechanism. They also have some other editions, so take a look.
Zoho ONE is one of them-- which is more of a CRM (full function software).
If you would like some videos demonstrating this software, please let me know by going to the website and either email me or voicemail me there or use Bookkeepermensch@gmail.com . With the now live YouTube channel, I can put up some short videos introducing you specifically about this software, but not until late spring after tax season is over and I get my head surgically reconnected to the rest of my body and I become whole again.
There is also ‘Fresh Books’. They have three online editions. “Lite”, “Plus”, and “Premium”. “Lite” starts at around $20.00 a month. You can track expenses, send as many invoices as you need to up to 5 customers, (if you are just starting your business, this would be good enough in many cases), get paid electronically with bank-to-bank transfers or credit cards, and of course reports.
The next step up would be the “Plus” edition @ around $33.00 monthly. It includes Unlimited invoices for 50 customers, you can set up recurring invoices (that is--- automating weekly or monthly invoices), you can also invite your accountant to log in at tax time and run their own reports and look at your data and running more financial reports than the “Lite” version.
The “Premium” ($60.00 monthly) includes unlimited number of client invoices, track job profitability and customize email templates.
The general theme, although all of them do have their own ‘Terms and Conditions’, their pricing is less than QBO, which again, is the most popular, but not necessarily the best.
Keep in mind that not all online software allows you to import .CSV files or take your accounting from another piece of software and convert prior years of data to their software. But if you are a startup with no data entered, you have an open world of accounting software to choose from.
Another piece of software that I took a look at is called ‘Akounting’ with a K. This is truly a piece by piece (or what I like to call A La Carte) software. They have different tiers of basic software, and then you can add modules. Some of these modules you would need to purchase, such as the ‘Double Entry’ module, that you would get the Chart of Accounts, Balance Sheet, General Ledger and trial balance’. The other modules include projects, inventory, payroll, and employee expenses. I have always liked the idea of A-Lacarte, or ‘components’ if you will, rather than having everything combined in one integrated software or any item, like an audio system, for one example.
Take a look at Nerdwallet.com (I’ll provide these links underneath this episode) and take a look at the free accounting software that also exists.
There is still desktop accounting software out there. Zoho has one called “Zoho Books Desktop accounting software”. I’ll include that link as well. I will also include this in the next newsletter with all the links… so sign up for the Substack newsletter! And did I mention, It’s free? It’s’ FREE!
I hope that gives you some ideas and possible choices rather than just going to the ‘big guys’ for your accounting needs. All software has its quirks and things it doesn’t do, or doesn’t do well, but each business has different accounting needs.
Since bookkeeping has changed in the last 10 years or so, and the kinds and amounts of transactions have changed, the needs of business accounting have changed as well. I have clients who have 800 transactions every month, and to type them into desktop software would be time consuming. Using online software is much easier because of the downloading, but as I have mentioned in the last episode, you can’t trust bank downloads 100%. You still have to reconcile the bank accounts to make sure that every transaction was captured within the download.
I digress, but I have to relate this one story about a recent situation with a client’s online accounting when he tried to do payroll using the Intuit (QBO) payroll system. He set up the payroll, and when it came time to pick the bank account that he wanted to connect his payroll to, he didn’t. The system created a ‘clone’ bank account called the same thing, but actually another account on the chart of accounts. The payroll went through to his employees, and showed up on the profit and loss, but not in the correct bank account. When I tried to reconcile the bank account, I was missing all of the payroll entries. I used the downloads from online banking to reconcile the bank account, but I then had the entire payroll twice in the profit and loss. I ended up having to merge the wrong bank account which only had payroll entries in it with the real bank account, and then take the downloaded payroll ‘Direct Deposits’ from the online banking area, and enter them in the balance sheet labeled “2024 Double Entry Payroll Entries”. Even after merging the two bank accounts, the payroll entries still didn’t register in the correct bank account. So, I had to manipulate it to work, which I finally figured out. This problem, my grandmother, who was a bookkeeper for 50 years, NEVER had to deal with. It’s a different world in online accounting.
With all of that said, it’s still tax season -- I’m getting back to work for the last week or 10 days of the annual craziness. I hope you’re less stressed than I am --- I’m Paul Rosenblum