Choosing the Right Accounting System for Your Small Business
One of the most consequential decisions any small business owner will make is which accounting system to use. This decision can make or break your company both financially and in terms of operations. From my days in Boy Scouts, let me draw an analogy: when we talked about ropes, we always asked, how long does the rope need to be? The solution was easy: As long as it needs to be, and probably a little longer. So, let's apply the same concept to picking out an accounting system.
Do You Need QuickBooks, Great Plains, or Something Else?
There are countless accounting systems available, each tailored to different industries and business sizes. Popular options include QuickBooks, Great Plains, and other specialized systems. But how do you determine which one is right for you? Here's my advice: you need a system that meets your business needs with a bit of extra capacity, but you don’t need all the bells and whistles.
Focus on the Essentials
Many vendors will try to upsell you on advanced features that you might never use. As a CFO, I emphasize the importance of good reporting. Your accounting system should enable you to:
- Show profitability by account and section of your company.
- Produce accurate profit and loss statements (P&L) and balance sheets for the bank.
If your current system can accomplish these tasks efficiently, it’s likely sufficient for your needs. However, if it falls short, it might be time to consider an upgrade.
Industry-Specific Requirements
Consider your selected industries' specific requirements, such as your accounting system is able to track profitability — costs by job if you are a construction company. If it cannot, then you have the wrong system, and it is time to invest in a new one. You will undoubtedly find different levels and features of systems you are reviewing. Looking for document storage, or online billing capabilities? The answer is not one-size-fits-all. The key is to take it slow. Connect with a professional to tailor to you (likely your accountant, or you can contact us at the Jason Waters Lending Team, we're happy to help).
Choosing the right accounting system doesn’t have to be overwhelming. Focus on what your business truly needs and avoid unnecessary extras. Remember, just like with ropes, your accounting system should be as long as it needs to be, maybe a little bit longer. Take the time to consult with a professional and select a system that works for you—nothing more, nothing less.
