To QuickBooks or not to QuickBooks: How to decide

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QuickBooks, accounting
Photo by Steve Johnson on Unsplash

EDITOR’S NOTE: This article is part of motherbility’s Start-Up Kit for Start-Up Businesses. 

Lots of entrepreneurs start businesses without having advanced knowledge of accounting. But they still want to run their businesses well — and legally.

That makes “Do I need QuickBooks?” a popular query.

(There are other options for accounting software, but QuickBooks is the giant of the industry. About 80 percent of small businesses that use accounting software use QuickBooks.)

So, should you purchase QuickBooks? Do you need it?

QuickBooks, accounting“Technology is great if you know how to use it, and it’s functioning the way it’s supposed to,” Justin Johnson, an accountant with Porter & Sack, CPAs, said during a January workshop for small-business owners. “But at the same time, there’s no need to get overly complicated with stuff.”

QuickBooks offers a lot: It tracks income and expenses, allows you to import banking and credit card transactions, notifies you when tax payments are due, automatically updates its programs when tax and payroll laws change … .

That all comes at a cost, however. And especially when you’re starting a business, every penny counts.

QuickBooks will cost you $200-$300 if you buy the software, or you can opt in to the online version, for a monthly subscription fee of $20-$60, plus more if you have payroll included. (So the cheapest plan will cost you $240 annually, or $468 if you include some payroll services.)

Also, it’s important to note, QuickBooks won’t do your accounting for you.

You still need to track your income and expenses and input them into QuickBooks correctly. You still need to know your business.

“The output is only as good as the input,” Johnson said.

Generally, the more complicated your business is, the more helpful QuickBooks will be for you.

“For a lot of businesses, they don’t need a super-sophisticated accounting system,” Johnson said. “They just need one that’s going to summarize everything up for them.”

A checking account, spreadsheet and a good online banking system can do that, he said.

On the other hand, he gave as an example, are electrical contractors: They have an elaborate pricing system, and their businesses live and die on the accuracy of their estimates. If they input all their prices, they can evaluate a a proposed project and have QuickBooks quickly spit out an accurate estimate.

Jeff Quinlan, who teachers courses on QuickBooks for Madison College, said QuickBooks also can be helpful for someone with multiple businesses.

For example, if someone teaches piano lessons, runs an in-home child care and offers lawn services as well, that can all be done through one accounting system in QuickBooks, Quinlan said.

He did caution, however, against using QuickBooks without training.

“I would not recommend a brand-new entrepreneur just staring out using QuickBooks on their own,” he said. “That I wouldn’t recommend. The only reason is you’re going to get buried in the details.”

If you are going to use QuickBooks, Quinlan suggests two things:

— Input your old data into the QuickBooks system to help you learn the program, and/or

— Track your income and expenses in QuickBooks and a separate spreadsheet, simultaneously, for a few months, until you’re confident that you’re using QuickBooks correctly.

Johnson offered this guidance for choosing an accounting system.

“It has to sort of meet these tests,” he said. “It has to be simple to use. It has to be easy to understand, reliable, accurate, consistent, timely and tailored to your business.”

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