Whether you're a freelancer, contractor, sole trader business or small business owner, you need to make sure the book-keeping or accounting program you are using suits the needs of your business. If book-keeping is something you find challenging, or you're not sure whether you're using the best book-keeping program for your business, read on.
Whatever book-keeping or accounting program you use needs to be a program that suits the needs of you and your business. The type of program that will suit your business depends on how big or small, or what type, your business is; whether you have employees; how much you earn; whether or not you are registered for GST.
If you've been running your business for a while already, your business will have been changing or growing. Every now and then you need to make sure that the accounting program you started with is still the best one for your business. In other words, you need to make sure your book-keeping is keeping up with the growth or direction of your business. If it is, you can keep using the same program. If it's not, you'll have to look at moving on to a new program that better suits your business at this stage of its life.
If you have just got your first ABN and are starting up as a freelancer, contractor, sole trader or small business, you'll need to decide fairly quickly what kind of accounting program is best for your business.
If you started off using a basic book-keeping program when your business was very small, but your business has since grown in income or complexity, it's more than likely that one day, your accountant or a colleague will suggest that you upgrade to a more advanced program that better suits your business's needs. Ask your accountant what suitable programs are compatible with their systems. Reach out to your networks and find colleagues who use the programs the accountant has recommended and ask them to explain how those programs help them run their businesses, how user-friendly they are, how expensive they are. Once you've gathered all the information you can, decide which program is best for you and discuss it again with your accountant in case she has another view. Then buy the accounting program that is best for your business.
In a nutshell: conduct a fair bit of research and make sure the accounting program you choose is the best fit for your business before taking the expensive step of buying and learning to use it.
When I first started my business I downloaded a free, very basic book-keeping program which I used for several years. Later on, I moved to a new accountant who told me the program I was using 1) didn't properly meet my business or GST-reporting needs, 2) didn't create the sorts of reports that I really needed to run my business and 3) didn't allow my accountant to properly check and cross-check my book-keeping information and was, therefore, simply not good enough.
My accountant gave me the names of some programs that would be suitable. Luckily, I have a sister, Penny, who is a real whizz at maths, book-keeping and accounting and has lots of experience using Reckon (which used to be called Quickbooks). Penny offered to teach me Reckon. So I bought Reckon. Penny came and stayed with me for a week during which time she patiently taught me how to use the program until I became familiar with most of its functions. Then over the following months, she supported me and answered my questions over the phone until I became better at using it.
And now, guess what? I can input all the right information and get it to do my monthly reconciliations and work out my BASs. I can get it to compile all kinds of reports that show me where my business is at, and show my accountant what she needs to see. I Reckon I'm pretty good at it.
The best book-keeping or accounting program for your business:
Some book-keeping or accounting programs are one-off purchases; others monthly subscriptions. Some are basic; others complex. Some are online and Cloud-based; others fixed on your PC. Some are more expensive; others inexpensive or even free. Do some research. You'll find a program that suits your business needs and budget.
I've recently been talking to colleagues about the different book-keeping programs they use. Some freelancers use Excel spreadsheets which they say suit their purpose. Other freelancers and sole trader businesses use more complex programs like MYOB or Reckon or Xero. Some people move around a lot or need to be able to go online and use their accounting program from anywhere. They use accounting programs that operate on the Cloud rather than sitting on an actual computer like my program. And they like the fact that if their computer crashes, they haven't lost any accounting information which is all sitting up there on the Cloud. There are a few Cloud-based programs around including Xero, a Cloud-version of Reckon and even a free-download online accounting program.
I do all my work from my home-office, don't need to access my accounts outside the office and my accounts are regularly automatically backed-up onto an external hard drive. Reckon seems to do everything I need it to do and it's pretty efficient to use, so I'm happy to stick with Reckon (and off the Cloud) for the time being. Having said that, from what I've heard, there are some other accounting programs out there that might give you better efficiency and value for money.
Next time I need to upgrade - which will happen one day because, as we all know, nothing ever stays the same - I'll take my own advice: do some research, talk to my accountant and colleagues, and choose the program that best suits my business at that time.
It's probably already pretty obvious that I am a firm believer in asking for help if you need it.
If you don't know enough about book-keeping or accounting to be able to decide the best program for your business, ask your accountant, or any colleagues who know more about book-keeping than you. Once you've done that research, you'll be able to choose a program that best suits your business needs. Buy it, open it up; take yourself through the program's tutorial.
If you've used similar systems before, you'll probably be able to learn to use your new program without any outside assistance. If you're finding it difficult to understand the tutorial, ask for help via the accounting program company's helpline. But if your experience in using a database is very limited, and you're still struggling to teach yourself to learn the program, it's time to ask your friends, family, colleagues or other businesses for help.
My sister was generous enough to give me hours of one-on-one lessons to teach me how to use my new program. Whilst you may not be lucky enough to have a sister who's an expert in your accounting program, it's likely you have an industry colleague, friend, book-keeper or accountant who knows how to use your accounting program and is willing to either lend you a hand for free or give you some one-on-one training sessions for a fee. Any money you spend on training will be cash well spent if it results in you being able to use your new accounting program.
This article is based on my own experiences since starting On Time Typing as a small (sole trader) online/onsite scribing business in 2002 which has evolved into an online transcription, scribing, writing, editing and proofreading business.
Stay posted for future articles about book-keeping, BAS statements, tax tips and managing an online business.