Is QuickBooks Online Right for Your Small Business?

Hello. Are you a small business or self employed owner wondering whether QuickBooks Online is the right software for your business? In this video, I am going to help you make that decision. My name is Ronica Kenna. I am a cpa, a CFA and the founder of Montreal Financial where I've helped hundreds of business owners set up and work with QuickBooks Online. And I also have a masterclass that, that you might find useful, the link for which is in the description. Okay, so if you are a small business or self employed or freelancer, you need an accounting system. This is absolutely essential. And basically you have two choices. You can set up a spreadsheet or you can sign up for an accounting software. And ultimately this is a cost benefit analysis. And so what I'm going to do is I'm going to go through the features and the related benefits of QuickBooks Online and you can determine whether it makes sense in your situation to get it. Okay, so first of all, obviously QuickBooks Online comes with a cost. Like many software apps, there is a monthly cost and this cost increases every year. So this is the fundamental thing, thing that you want to keep in mind. So now why would you need accounting software? And the three most important reasons to get an accounting software is A, it can help you save a significant amount of time, B, you can do a great deal of analysis with accounting software and it preserves all of your history. And, and finally it gives you all the reporting that you need for tax purposes. So it greatly simplifies what you have to do at the end of the year at tax time, whether you're doing your own tax return or you are outsourcing to an accountant. Now let's talk specifically about some of the features of QuickBooks Online that I think are important for any small, small business owner. And the first one is invoicing. And many of you will invoice your customers or your clients. And right now you may be using something like Word, or you may have a system set up to invoice, or you might be using another software online. The big benefit is that your accounting software and your invoice are all in one location. So, so every time you enter an invoice, it will reflect in in the accounting, which will then carry forward to your reports. And you can see exactly how much you've invoiced, who you've invoiced, what kind of products you're selling well or what kind of services are selling well. You can look at geographical segments. There are all kinds of insights that you can glean from your Accounting reports and in QuickBooks Online. And as long as you set it up well, you will have all of this information available. Additionally, you can see your history going back to the inception of your business, which is really, really useful. And you can track your sales taxes very easily, as QuickBooks Online basically has tax codes that you can simply assign to the invoice. It will calculate the amounts automatically and then will be available in a sales tax report that can simply be transcribed onto your gst, HST and QST filings at the end of the year, at the end of the quarter, whenever you do your filings. So again, invoicing is a really important feature. And the benefit of using something like QuickBooks Online is that instead of creating an invoice outside of the system in something like Word, not, not being 100% sure that you're always calculating it correctly because you might be doing it manually, you simply enter the information. It takes a lot less time. You can email it directly from QuickBooks Online and then you don't have to transcribe it onto a spreadsheet to keep track of it. So again, there's a significant time saving element to this and you can also see all of your insights relating to your invoices. One of the other really important, and one of my favorite features of QuickBooks Online is that it allows you to connect your bank and credit card accounts. And I always recommend a separate bank and credit card account for your business. So you can download the transactions into QuickBooks Online. It sort of puts them into a staging area and then you categorize them to the correct accounts. The advantage of of this is that it significantly reduces the amount of data entry that you have to do, and it also reduces the errors that might crop up or emissions. You might miss expenses, you might miss some invoices, a customer, a client might actually send you the wrong amount. So there's all kinds of ways in which this banking and credit card download can be useful. And once you start using this, it is very difficult to go back to any entering things onto your spreadsheet manually. The next benefit of QuickBooks Online is that you can enter all of your expenses in the same way that you enter your invoices directly into the software. And as mentioned, with the banking download, if your expenses go through your bank or credit card account, you can simply allocate them. So even if you have a lot of transactions, this can be streamlined quite, quite a bit by using the download feature and by creating rules that will automate the transaction entry. And once again, the Chances of you missing or incorrectly reflecting an expense is significantly reduced. Not to mention the time saving. The expenses will all go on to the profit and loss report, which is the fourth benefit of QuickBooks Online, which it gives you extensive reporting functionality. Most importantly for all of you that are small business owners or self employed in Canada, you need to reflect your profit and loss, your total revenues and your expenses by category on your tax returns. Whether you're a sole proprietorship or an incorporated business, QuickBooks Online makes this very easy. With a profit and loss report, you can you also have the balance sheet, which is important particularly for incorporated businesses and for analysis. But in addition to that, you have numerous other reports that you can use depending on what your needs are. So you have several kinds of sales reports, expense reports. You can see sales by customer or by product or by service. You can see expenses by supplier, by service or product as well by category. You can also see all your transactions in various different formats. You can see how much your customers owe you at any given time. The name of this report is the Accounts Receivable Aging Report, and this can directly help you save money by allowing you to track how much you're owed and send reminders directly through QuickBooks Online. So again, again, a very useful feature that is there. It also has the Accounts Payable Aging report where you can see how much you owe to your vendors and you can manage your cash flow. The next benefit of QuickBooks Online is that you can track your sales taxes. So once you set up sales taxes and the associated codes, you simply select the code that applies to the transaction, whether it be sales or expenses. And once you do that, QuickBooks, as mentioned, will track this in a separate report and that report is formatted to match the report that you have to file to Revenue Canada or Revenue Quebec. So this simplifies the process significantly, rather again than having to manually track it outside of the system. And the final benefit that I'm going to mention here, there are many more, but I think this one's important, is that you have history. So if you're using a spreadsheet right now, you're probably creating a separate spreadsheet for every year, and this can be difficult to review. If you want to look at prior year transactions with QuickBooks Online, there are various ways to query your transaction so you can see exactly what was done in the past, how it compares to previous periods. You can see all of your expenses and sales since the beginning of time. And you can track this by year or you can do it by month. There's all kinds of ways in which you can create reports that will give you useful insights that can help you improve your profitability. One of the ways is to determine what your bestselling product or services, for example, and if you're able to see this, then you can perhaps spend more time selling that or working on that. You can look at your expenses, you can look at how to save costs, what you're spending a lot of. There's again, all kinds of ways in which you can analyze your reports.

So now finally, not again. Not all of you necessarily need to upgrade to QuickBooks Online. And the questions that you have to ask yourself to make that decision are first of all, how much extra time do you have and how much is that time worth? So if you find yourself with, you know, a fair amount of extra time during the year and you don't mind doing your accounting in a spreadsheet, then that's fine, then you can continue using a spreadsheet. Secondly, and perhaps more importantly, how many transactions do you have? So if you only invoice a couple of customers a couple times a month, then maybe a spreadsheet is more than sufficient and you only have a handful of expenses. A lot of service based businesses just don't have that many expenses. So it may not be the worth the cost of using something like QuickBooks online. Another question to ask yourself is how frustrated do you get when you're doing your accounting and are you just kind of doing it all at the end of the year and is it very stressful with bookbooks Online? Again you save a significant amount of time and you also reduce the amount of data entry and the frustration of trying to figure out where transactions go. It takes the guesswork and a lot of the decisions, decision making out of your accounting because this is literally what it does. It is set up to help you enter your transaction sort of seamlessly and then you get the information and the reports that you need.

So I hope that was helpful. If you have any questions, please leave a comment and I will try my best to answer it. I also have a QuickBooks online masterclass if you do decide to upgrade. This is essentially a one hour review of QuickBooks Online. How to navigate the most essential parts that every small business owner self employed person needs to know when they start using QuickBooks online. And I also give you a bunch of time saving tips and there are some bonuses that are available. The link to this will be in the description have a great day.