Choosing The Right Accounting Software

Greetings, folks, and welcome to the Small Business show here at BusinessShow Co, episode number 27 for Wednesday, August 12, 2015, here in Durham, New Hampshire. I'm Dave Hamilton.

And I'm Shannon Jean, coming to you from Lafayette, California. How you doing, Dave?

I'm doing well. I'm doing well. Yeah.

That's great. Hey, before we start today, I just want to thank, you know, people that went to BusinessShow Co and took the 18 seconds to fill out the reader survey.

They all confirmed, every one of them. The answers were. Were all different, but every one of them confirmed that the 19 19th second was worth the 18 they spent to get there.

That's right. That's right. So, yeah, if you have not gone through that ex. Most excellent experience, just jump over to BusinessShow Co and, you know, give us your thoughts real quick on what you like, what you don't like and help guide us. And, you know, we. We're doing the show. We want to keep you informed and stuff you're interested in.

Very, very good stuff. Hey, so today we figured we would answer a question or two from you. So these questions, this question, this first one certainly. And perhaps the second if we get there, came into feedback. BusinessShow co. So be sure to send your questions and your thoughts there. Stefan. I think it's Stefan, right?

I think so, yeah.

Says, quick question for you, since you are both. This was sent to me, but really sent to both of us. But he said to me, he said, hey, Dave, since you are both a business owner and a Mac geek, what Mac accounting software do you recommend? I cannot imagine that you have a Windows box sitting around for that purpose. I hear that QuickBooks for the Mac is lacking features compared to the Windows version. Is it still good enough, though, or have you come across something better? And I appreciate any tips you can share. So Shannon and I are both Mac geeks. You've betrayed that a few times in the show, but certainly my public Persona sends that message pretty clearly. So that's perhaps why Stefan's question was targeted at me. But I think we're both quite ready to answer this question. So I'm actually curious what you think about Shannon, and I'll share my thoughts later.

Yeah, and, you know, it's a great question. And if you recall back to a few episodes ago where we did an interview with RJ Waldron, who's a fishing and hunting outdoor guide, when we asked that question, each time with each interview is like, hey, what if you could look back when you were first starting your Business. What's the most important thing you could, you know, tip you would give yourself. And his comment at the time, why he said Quicken. And we all, we kind of, you know, chuckled and laughed and he's like, no, I'm serious. You know, being. Picking a good accounting system to keep track of what your actual costs are, what your actual, hopefully profits are, is, is, is critical. And so that's. Stefan, that's a great question. And we've, I've used a bunch of them and you know, right now I will tell you, I use a product called Account Edge and on the, it works on the Mac. It used to be called myob.

Right.

If you mind your own business. And we actually, we use QuickBooks for a number of years. But Stefan is right there. They kind of lagged in development and you know, some features were not as robust in the, on the Windows side. And so we transitioned over to Account Edge. And you know, it, it's a standard double entry accounting package. I would love to, or I'd like to tell you that I really love it, but I don't know that I've ever found an accounting package that I really love. It's. I, I can say the two variables. Like if you're familiar with FileMaker Pro as a database, FileMaker Pro is incredibly versatile and you with very little knowledge can make it jump through incredible hoops to do things for your business that you know are just awesome. Everything from, you know, related to sales things and shipping, all kinds of stuff. An accounting package that you buy is typically not very modifiable and that would be my biggest complaint about accounting packages. But perhaps since I'm not an accountant, that's kind of their reason for being. You can't modify it much because they're sticking to certain rules and logic to keep your book straight. But Account Edge, we love it. We actually run it via vnc. So we have a server in our office and we've got a multi client version which has like, I think it's a 1010 license thing. And, and we have all these clients, you know, we run a VNC server on a Mac Mini. And so everybody in the office who needs to get access to it can access to it. And we also run it, but nobody.

Runs it locally on their machine. They all VNC into that to the Mac that, that runs it there.

Yes, it speeds up the, again, it kind of comes down to versatility but you know, we're using a relatively inexpensive out of the box piece of software and so we've adjusted our Behavior to address that and then to minimize a negative thing, which was when it was running all on our local machines, it.

Was very slow because you had one data store elsewhere across the network that it was transacting with.

Yep, exactly. With the vnc, basically you open up a. I mean you can use chicken of the VNC app or you can use Apple's built in screen screen sharing.

Yeah, okay. Yeah.

And it works great and I love it. And the best part, I will tell you is being able to click a button and run a report and get real time data on any of this, you know, these products and we'll talk about a few other ones and. But I'll preface that in is there's that old rule, you know, garbage in, garbage out.

If you don't. If you classify everything as miscellaneous, it. It will. It will be that way. That's right.

Yes. Yeah, you're for. So, you know, part of the, actually the really important part of this equation is, you know, okay, which, which piece of software am I familiar with? And most of them have demos you can download, but the setup is really important in how many, you know, what the different kinds of accounts are. And like, for my tech restore business, you know, we want to track revenue by, you know, every different product that we service, we want to track it by different components that we sell, different channels that we sell in. So when you set up these accounts and classes and jobs, if you will it, it really makes the software much more powerful. And most of these, you know, like Account Edge or even QuickBooks, if, you know, you look at that, they have tutorials or you can go to lynda.com and there's some great tutorials on Lynda about both of these apps and ways to set them up. They kind of come with generic widget company accounts, but it would behoove you to spend a lot of time thinking about how do I want to track my income? Well, what's important to me, you know, and when you just make a list of things and maybe do it in a spreadsheet or just on a piece of paper, those things will kind of boil down to the types of accounts you want to list and how you want things classified to. Like Dave said, you don't want everything in just miscellaneous income. If you're a consultant, maybe you want a hardware account versus software or maybe you want your service billing versus something else and so on and so forth.

I'm curious and I'll start at the beginning with me eventually. But while we're on you here I want to ask you some questions. You have multiple people, obviously, looking at and potentially inputting data right. Into Account Edge for you.

Correct.

How do you keep control over category names? Right.

Because.

Well, at the same time as you don't want everything in miscellaneous, you. You need to have some standard of, you know, how do we classify things like this? Who. Who gets to create names of categories, for lack of a better term. And it's really accounts. But. But, you know, who. Who get. How do you. How do you deal with that?

Sure, sure. And Account Edge, and, you know, And I think QuickBooks as well, they all have different levels of user. You know, you can set up different user levels, so you have administrators and you have people that can do data entry, this kind of stuff in our. And I'm in the inventory business, and I also have a service business. So for products that we sell, what we do is we set up these classes or accounts, and we assign those. Those accounts to a particular product line. Let's say iPad sales. Well, there's an income account for iPad sales. There's a cost of goods account for iPad sales, and there's an expense account, you know, for. And those things get assigned on an inventory level. So they're always the same. They will never be different.

Got it. So you've standardized a formula for creating accounts. Got it.

Yeah. So it may be that, like, maybe there's an account that starts 5,000. That's hardware. And, you know, 5,001 could be hard drives, 5,000, two could be, and so on. And you can just drill it down to, you know, again, the power of these things is they will track data in the. In the minutia. But you got to set it up in the beginning. Or. Or, I mean, we still add stuff all the time, but you have to think about what you want to track.

Yep.

And. And how to set it up to where the software can do what it's designed to do.

Yeah. And that's where. Honestly, that's where. Looking at some of those training videos, even if you've been using whatever QuickBooks account edge, whatever your product of preference is, even if you've been using it for decades, taking a look at how someone else uses it might open your eyes and you go, holy crap, I can do that. Right. Because we get into the habits of, okay, this is the stuff I need to track. I can reconcile my bank account, I can get the stuff to my accountant, and I can run a P and L. I'm not losing money. Right. That's awesome. But. But, like, you said it really can help to get granular with this stuff. And you might even, you might not even realize you might already have your data set up exactly the right way. You just don't know the path to take. Or you might have it set up the wrong way and then you realize, hey, here's the path, okay, I can go back, you know, and you don't have to go back for, you know, I mean, it's July, right. You could go back to the beginning of this year and recategorize stuff. It'd probably take you a day or less. And then now you've got all this data and you're in good shape.

Yeah. And you know, speaking of the data, there's. I know Account Edge I don't believe has an online version, But I think QuickBooks does. And I know, Dave, you're going to talk about FreshBooks a little bit, but those are also very beneficial because typically they'll tie into your other accounts, you know, online credit card accounts, your bank accounts, this kinds of, you know, these kinds of things. And with Account Edge, we download data and, and run imports, which is very easy and works out great for us. But you, you want to get that, all that data out there, you need it in this system so you can press that button and you know, I would say forget profitability ability, but if nothing else, cash where your cash is going because I guarantee you, I mean, we, we have the mantra, you know, cash is king. I mean, profitability is often second. You, of course you're trying to get there, but if you run out of.

Money, you got in trouble, got to manage cash flow first. That's right. That's a whole different show. But, but, but it relevant here because you can pull up those cash flow reports too and just see. All right, where's my money? Yeah, yeah.

And what, what's coming up? You know, what, what do I need to budget for, you know, next week? What am I, am I allocating enough money for, to cover my payroll? You know, what's my payroll on average, the last six months, one year historically okay for us, June, you know, July is kind of a little slower hardware month because people are out of school. We have a huge educational division. You know, people are not buying as much stuff during the summer. They're on vacation, everything. So we have to know that. Okay, so we're going to, maybe there's an extra payroll that's going to impact because our revenue drops a little bit during June or July. Sure. And you want, you get that historical data to look at year over year to see how it, what that it helps you project, you know, by looking at the past, it helps you project what's going to happen to your business this year.

Yeah, it's true.

So Dave, I think you have a little bit of familiarity with FreshBooks, which is a relatively recent online service, right? Is that right?

Yeah, it is. FreshBooks is not something I've used for my business, but we dug into it pretty deeply in macgeekab. They were a sponsor for a little while and, and, and, and it just was, you know, it's come up in, in questions before over there. It is, it's an, it's an online service for, for lack of a better term. Right. That allows you to, it, it's really built for a business that's centered around invoicing. Right. So if you're a consultant, it's killer. Right. You know, because you're just, you're out there. They've got mobile apps. I mean it's, it's just, it's totally built for that kind of, you know, small business. I, I don't, I don't want to say it wouldn't work for, for your business or mine now, but, but it's, I don't, at least when we looked at it, it certainly didn't feel like that was what it was targeted at. Right. It's, it's for the sole proprietor, you know, maybe small shop, five people or less, where you're a service oriented business, right. You're doing consulting on some level or maybe you're an accounting firm. Although if you're an accounting firm, you've probably gotta have QuickBooks and all the other stuff. Right. But maybe a small law office could use this, right? That kind of thing.

Sure.

It's built in real time. You can, you know, the invoicing is really the key there because as we know sole proprietors or small businesses, but especially sole proprietors, one of the worst habits that happens is you don't invoice your customers for the work you've already done for them.

And why is that?

I don't know, but it is universally true. Right. You know, I mean, yeah. So, you know, FreshBooks really helps to solve that problem. And my guess is that that's kind of the core of where they started their business was like, if we can help that guy, just send out the invoice that he is owed on anyway, he's going to cover his monthly fee every time. And it's cheap. I mean, I think it, I wanted to say it Was like less than 10 bucks a month, you know, at least to start.

Right, right.

Yeah, it's, it's, it's low. And then I guess you can add features perhaps, or whatever.

Sure.

But, but yeah, that's really what it's built for is just taking the pain out of that process of invoicing. Well, taking all of the pain with the exception of, like, gosh, I'm asking someone for money. Right. You know, because I think that's where it comes from is, oh, it did the work. I love the work. That. And gosh, it seems so ridiculous for me to charge a hundred bucks an hour for somebody to pay me, you know, I mean, that. I think that's the, that's the hold up on those invoicing.

That makes sense. And the nice thing about, you know, like FreshBooks and some of these other, you know, services or apps, you can automate that and it takes it. Oh, you kind of step away from collecting the money. You know, you're not, you, you enter the data, hit a button, and the customer is going to get an email, there's going to be a link with the credit card, you know, that kind of thing. And you know that, that's fantastic, especially for a sole proprietor, you know, consultant that doesn't want to be involved in having to, you know, collect that or has a hard time doing it.

Yeah, well, and that's the thing, right, is it's totally built for that, the web developer, the contractor, you know, whatever that is. And yeah, yeah, it's 10 bucks a month. That's where it starts. Yeah, yeah.

And you know, the thing, you know, Stefan, is I would suggest you talk to a bookkeeper that maybe is going to help you out or an accountant that's going to help you out in, in set in getting this stuff set up, because no matter what, what application you ultimately go with, in which we talked earlier about setting up those accounts, you're going to be working with someone, someone's going to help you with that data. Whether each quarter you're going to send an export to an accountant that's going to look at everything, or you've got a bookkeeper that's going to help you, you know, settle things at the end of the month. They need to be on board and familiar with it. And they can certainly give you some probably excellent advice on, oh, you should set it up this way because we can get this data out of it. I would highly advise that you go that route as well.

Yeah, absolutely. Yeah. You want to have somebody there helping you Even if it's, you know, I mean, it should be more often than once a year that you talk to this person. But even if it's just that it's a start. Right. Somebody that, that you. That knows about this stuff and you have relationship with some. Yeah, it's interesting. Shannon, we, we still use QuickBooks here. Yeah, yeah. I started with QuickBooks years ago when we had our consulting business. I've always actually enjoyed accounting because it's. Yeah, I know, I'm weird.

You're scared me nowadays.

I know, but I, it's fun, right? Because it's you. Well, if you're doing things right in your business, you actually get to see the numbers go up. And so that's cool. Right? But. Yeah, but I also just like the, like any math, the simplicity of it, there's no emotion involved in what it's going to report to you. Right. You know, it is, it is what it is. Right. And, and so I've always enjoyed that and I always kind of found the process, the whole double entry accounting thing is actually really, really simple. And I got into Training People on QuickBooks Years and years ago and enjoyed the heck out of it because, you know, it was really easy to train people on it and people got it and like, oh, this isn't nearly as hard as I thought it was. Like, no, it's not. You know, and you don't need to oversimplify. FreshBooks is a great thing, don't get me wrong, but all of us are capable of understanding this double entry accounting thing. It's not really difficult And I think FreshBooks actually does some of it. They just sort of obscure it, at least based on what I remember of it.

Yeah. And once you get it set up, most of that double entry stuff is going to get taken care of in the background.

Happens automatically.

Just happens.

Yeah. And for everyone who's scared of the term double entry accounting, let me explain it at least as it's been a while since I've explained it. So this isn't going to roll off my tongue. But the idea is, you know, when you, when you, let's say when you write a check, right, You've got, you're logging in the bank account that you wrote a check for $10, but you're also logging along with that check what category or account that check was for. So if I wrote a check for $10 to say FreshBooks, right. I would say that that was an accounting expense. Right. And so now that's. The double entry is. I now can look at I can find that transaction. It's, it's correlated and categorized in two ways. I can see it when I'm looking in my chart. My, my bank account and my, you know, that would be like sort of my, my internal bank statement or my checkbook register. And then I can also do a report and say, hey, what did I spend on accounting this year? And it would show that transaction. The nice part about that is, is if I paid freshbooks by credit card, I wouldn't have to think about, well, wait a minute, is that in my bank account or did I pay that with my credit card? And therefore it's going to show up differently. All I do is I look for accounting and boom, there we are. Now really it's triple entry because in addition to being categorized in my bank account and with the accounting expense category, it's also categorized for freshbooks. So I could search by customer, by, by vendor, and then find all those transactions too. That's all this means. That's it. And the transactions have to balance, you know. Yeah.

And it's linked in all different ways, just like you described. Yeah, that's powerful.

That's it. That's all, that's that all the mystery of double double entry accounting is gone now. That's all it is. Right. So this isn't difficult. So, yeah, we, we were with QuickBooks because it's what I trained on. I trained a lot of it on Windows, but I did quite a bit on Mac. And then, yes, the Mac version faltered for a while and we tried Account Edge. And so I did double double entry accounting for about six months with two businesses and tracked everything in both places. And maybe it was just because, you know, change is hard.

Oh, yeah.

I never was really able to wrap my head around Account Edge. I mean, I understood it and everything was fine, the report's all balanced, but I just didn't like it. I guess that was it. It's just a preference. And thankfully QuickBooks has sort of come back around and is in much better shape now.

Yeah, that's what I was going to mention.

Than it was. Yeah. So. So if I had to answer Stefan's question, which now we're, you know, 20 minutes after he asked it, I would say go with QuickBooks, I really would. Unless you don't expect to, to grow. I don't know what business you're in and why you're asking the question. FreshBooks may well be right for you, but QuickBooks is, I mean, it's the industry standard. How do you deal with, does your Accountant also run Account Edge. And, and if so, do they run it for just you or do they have other clients using it?

No. So they don't. He doesn't. You know, of course you can send him the QuickBooks file anytime, but he doesn't. But, you know, we brought, when we did some reconfiguring of our business and we changed some way things work. That's when we looked at accountage and it had some specific things that we were looking for. And like, I won't go into them, you know, in detail, but what we basically do is our account, you know, accountant and our bookkeeper both can just VNC into the server. They can look at reports. And primarily what they do is they just export data into Excel and run reports and gather information from there. I think, Dave, you're right on this. Try out each one, see what you like about the interface, what you don't like. Um, and I think that, that the, the key is, you know, Stefan, you're, you're on the right path because it doesn't matter if you are going to sell a thousand dollars a month or a million dollars a month, you need that data. And if you grow your business, you're going to come. There's going to be a time that you're going to be distanced from all those expenses. And the only way. What I mean, what I mean by that is you're not going to write all the checks, you're not going to be paying all the bills. So being able to run a report at the end of the month, so you can go, okay, gate, let me look at the P and L. Whoa. How much did we spend on, you know, Google Ads? And I've had that happen.

Yeah.

And you're like, oh, my God, you know, this is ridiculous. Well, then you can start to, you know, it prompts you to start to look back on what's going on while it happens in. Because you're not there doing it. The bills are coming in, the bookkeeper's paying, UPS, FedEx, they're paying whatever. The best way to keep your finger on the pulse of what's really going on is with that software.

Yeah, no, that's right. Yeah. You and take every one of these packages is going to go nuts about convincing you to make backups. And in fact, QuickBooks, at least the current version for the Mac. And I mean, it's been this way for a little while. It will do a backup every time you quit. And it's. And you can, it's automated. You can set it up that way. Do it. You know, storage is cheap right now. And you don't need to save years worth of these, you know, daily backups or whatever it is, but. And you know, save a month's worth. Save 30. What's it. What's the harm?

Absolutely. Because small files, you know, small base.

Yeah. Yeah. And if something happens, man, you've got it, you know. Yeah. Anyway, for sure, I've.

Awesome.

I've been in that situation where you realize I have too. Crap. You know, what's been going on for two weeks? Oh, no, no, no, no, no, no. You know, so. Yeah. Yeah.

Awesome. Well, that's great. Well, we thank you for the. The question, Stefan. You know, any. If you need any follow up, feel free to send an email to feedbackusinessshow.co. that's dot co. Anybody else out there has anything they'd like to add, tell us what we're doing right or what we may have got wrong, we'd love to hear from you.

Thanks, folks. We'll see you next week.

All right, Take care of.