QuickBooks is an incredibly popular accounting and payroll software, but it may not be the right choice for every small business owner. To learn whether QuickBooks is right for your business, you must first determine how you plan to use it.
The bookkeeping software is used primarily in its full capacity or broken up into specific modules, such as accounts payable, check writing and payroll.
If you plan to employ QuickBooks to help manage your financial reporting and accounting, there are certain skills you must have in order to use the software effectively, as the technology itself does not have the acumen of a real accountant.
QuickBooks is not used by every business in the same manner. There are two ways in which the platform is generally utilized:
Complete Software Package
Use the complete functionality for all accounting and financial reporting needs.
Use only the specific QuickBooks modules you need to track and manage your small business. The most popular modules include:
In order to confidently use QuickBooks to manage all of your accounting and financial reporting needs, either you or a team member must have a fundamental understanding of accounting procedures. The accounting software does not do the work for you, and using it may become frustrating if you don’t have the proper experience.
In addition, your reporting is only as strong as your record keeping. You must be diligent and keep great records. Otherwise, you’re wasting your time and money.
Using the modules that QuickBooks offers does not require an accounting background, but you do need to have a general business background to adequately benefit from the functionality of the system. You should also be fairly tech savvy and have the confidence to navigate it like you would with any other sophisticated software.
Even if you don’t use the full functionality of the software, it doesn’t mean the investment is not worth it. If used properly, these modules are extremely helpful in running your business. Plus, a tax consultant can support you in conjunction with the QuickBooks modules.
That being said, your tax advisor shouldn’t ask you to learn accounting software if you don’t have accounting knowledge. You need an accounting or tax consultant who understands why you are using QuickBooks. Your advisor can’t turn you into an accountant – he or she must focus on the accounting and financial reporting aspects of your business. Otherwise, the benefits of the modules are significantly diminished.
It is critical to learn QuickBooks’ capabilities to maximize its full benefit, but especially as it pertains to check writing and accounting, coordinating these tasks with your advisor is essential to proper reporting.
For instance, if you write a check to a normal vendor to purchase equipment, this requires a different entry than if you were purchasing inventory. These distinctions make a difference. It is best to leave a detailed note to communicate the specifics of such a purchase.
On the other hand, you may never need to use or learn all of QuickBooks’ complex functionality. You might be far better off using a simpler software solution. QuickBooks is a popular brand, but it is still just a tool to support you. Ensure that it’s the right accounting and payroll software to address your needs. Before making any decision, take the time to research the products available to you to assess your internal capabilities and needs.
Keeping great records is just one helpful tip to avoid April surprises. Click below to learn the other important tax tips.