DIY Entrepreneurs
A standard oil change costs about $46.00 so some drivers opt to change it themselves, spending an average of $30.00 for oil and a new filter, according to Kelley Blue Book. Is the hassle of buying an oil pan, crawling underneath the car, and researching how to reset the maintenance light worth the savings? Self-employed entrepreneurs generally possess do-it-yourself skills, such as building their own websites and repairing their own equipment. However, when it comes to competent bookkeeping, being self-employed will require special attention. Thus, bookkeeping software becomes a helpful tool to track records and tax requirements.
One of the more popular options is QuickBooks by Intuit which currently controls over 80 percent of the market for bookkeeping in the United States and has over 2.5 million subscribers worldwide. QuickBooks seems to be the natural choice for businesses looking for a bookkeeping solution, but is bookkeeping software necessary? Is it a good fit for every business?
Record-keeping and Invoicing
Honestly, it is possible to fulfill record-keeping requirements without an official program like QuickBooks. Especially if business owners are comfortable working with spreadsheets. They must build a simple database to keep track of expenses, income, and other important records. However, just as some people are willing to pay an extra $16.00 to let someone else change their oil, some entrepreneurs are willing to pay for bookkeeping software.
For example, if a business sells subscriptions or provides regular services, QuickBooks’ automatic invoicing feature may be worth the price tag. The software will keep track of a client’s contact information so that an invoice will automatically be sent on a specific day of the month and, if payment is not made within a set time frame, a reminder may automatically be sent to the client. For business attorneys who represent clients and write demand letters for unpaid balances, having a coherent paper trail of transactions and communications is ideal.
QuickBooks also allows users to generate professional reports such as a payroll summary, sales tax liability, or open invoices. Instead of re-entering data or trying to design a report template, users can produce a wide variety of reports at the click of a button, minimizing the amount of data entry—especially if users connect their bank statements—and reducing the amount of time needed to create monthly, quarterly, annual or even customized reports.
Tax-related Features
Other businesses may value Quickbooks’ tax-related features, such as its estimated tax calculator and deduction tracker. Employees with a W-2 usually look forward to a tax refund in April, but small business owners know that tax time is when the big bill comes due. Making estimated tax payments and keeping track of receipts will help business owners prepare for their tax liability instead of scrambling to get everything in order at the end of the year. The IRS will want to know that you can justify your expenses with a record (generally a receipt).
Speaking of receipts, QuickBooks mobile app allows you to easily snap photos of business-related receipts. The app also tracks car trips and makes it easy to sort them into business and personal trips, swiping left for business and swiping right for personal (not too different from some dating apps). Although it is possible to keep a manual log of trips, miles, and destinations, a digital app definitely makes this process easier.
The Good, the Bad, & the Ugly
QuickBooks is not flawless. Like any other software, it needs regular updates to improve security and work out bugs. No software is perfect and with tax laws and rates changing all the time, there are inevitable problems that will need troubleshooting. One such issue occurred with a user who attempted to email invoices in QuickBooks Desktop and the problem hasn’t been resolved for over a year. The user invested at least ten hours of troubleshooting to no avail. An error appears when attempting to connect QuickBooks Desktop to an email in order to send invoices directly through the software, most likely a server communication error. While this is a very nuanced circumstance, it is an example of how software can have just that, nuanced circumstances. Knowing a CPA, bookkeeper, or knowledgeable forum user who is familiar with QuickBooks will often yield a faster response than contacting general customer support.
Also, while it’s not necessarily the “ugly,” the whole concept of QuickBooks is paying for peace of mind in bookkeeping. It is not easy to pay someone for something you could do yourself, but many people value efficiency and time-saving automation as part of their business models. However, it is not entirely hands-off or automated, you will be investing time in using and managing a comprehensive data-entry system.
You may pay anywhere between $50-$150 a month for the online version (depending on the plan you decide). There are also additional add-ons that would increase your monthly costs. The Desktop version is generally a one-time purchase at about $300, not including add-ons or later upgrades. At the end of the day, do your own research on QuickBooks’ various pricing structures, discounts for new customers, or trial periods.
Working from Scratch
Although it is possible to build a bookkeeping system from scratch, many small business owners will find it profitable (financially and time-wise) to invest in bookkeeping software. This may increase time for investing creativity and energy into other parts of the business and will pay dividends. Actual record-keeping requirements are fairly straightforward, so it comes down to choices. Does the opportunity cost of a program like QuickBooks outweigh the cost of designing a system from scratch.
QuickBooks is a well-designed bookkeeping system that meets the needs of many small businesses. This is both the best and worst thing about QuickBooks: It is designed to meet the needs of various types of businesses. It may be an overwhelming, expensive luxury to a business that uses only the most basic features. Approach it like a Swiss Army knife with thirty-three unique functions and decide whether you need most of them or maybe you just need the bottle opener.
