Pros and Cons of Online Business Accounting Software
As CPAs, we work frequently with online business accounting software and have found that it can greatly relieve stress at tax time, as well as offer other benefits; however, keeping financial records online also has disadvantages. This post explores the pros and cons of online accounting software. Discover if converting your record keeping to an online accounting software for personal or business use is the right choice for you. One of the most popular software programs is QuickBooks Online. We use this extensively and have found it to offer several outstanding advantages over keeping a paper checkbook.
You can access your data anytime, anywhere, provided you have a computer and an internet connection. I was actually able to work on a file while on the beach in New Jersey this past summer! Granted, not all functions work from an iPhone or iPad, but basic functions are accessible. Remember, not all Wi-Fi connections are secure and data can be compromised in unsafe places.
Online software, such as QuickBooks, keeps your data backed up. You do not need to worry about losing a history of your accounts or backing up files from a desktop computer.
Online software can offer banking connections that ease the burden of multiple entries into the check register. This makes account assignment and bank reconciliations very easy. In this case, online software can replace your paper checkbook. If you participate in online bill pay with your bank, it may be possible to download those transactions directly into your online check register. If you have handwritten checks, these are entered into the online software, just as you do with a paper register. Monthly, your bank reconciliation is done online, reconciling all cleared and open items on the check register with the bank statement. QuickBooks maintains a copy of the bank reconciliation, until the next reconciliation is done; therefore, a hard copy must be printed for your files if desired.
Tax time can be greatly aided by online accounting software. Compiling a balance sheet and profit/loss statement can be difficult using a checkbook and paper documents. Maintaining your records in accounting software allows you to produce these financial reports easily. Your accountant can use the profit/loss statement to look for tax deductible items that you may have overlooked while sorting out paperwork. Your balance sheet is invaluable when discussing retirement and other long term goals with an advisor. The more information you can keep in one place, accurately, the easier it is to reach your retirement goals and capture tax deductions.
Budgeting is simplified with online software. Your expenses are captured accurately and timely, allowing you to review them and plan ahead. You may be surprised to know you overspent on meals or other items!
There are also disadvantages of using online software. Following are a few issues you might experience:
You do need to have familiarity with all things electronic. If you are not familiar with computers, wireless access, iPhones and other electronic items, you may be frustrated with learning new things. Local groups, including the library, periodically offer classes to increase your knowledge of computer use. You may be surprised at how easily you pick up the skills needed to feel confident with a computer.
Time constraints may be an issue for the user. Do you have adequate time to enter data and reconcile your accounts? The success of the software depends on the quality of the data entered. Accurate data and timely reconciliations ensure good reports for review.
Cost may be a factor for you. Online programs, such as QuickBooks, are normally under $30 per month in fees. This cost may be worth it to you to simplify your record keeping and help you at tax time, or the cost may be prohibitive. QuickBooks does offer software called Simple Start that is under $15 per month, but it is basically just a checkbook, with no online banking import features available. You can always try the QuickBooks software for free for 30 days to see if you like it and if it would be worth your time and money to use.
To summarize, online software is new to many people and it offers advantages and disadvantages based on your situation. It is important to review your needs before deciding on the use of online financial software packages. If you feel comfortable with computer input, travel frequently and need access to your financial data, and can afford the cost, then online software might be the right thing for you. Want to explore your options further? Contact a professional in our Business Accounting Services group today by calling 574.289.4011.
*This article was published in the April 2014 edition of BOOM Magazine.