Managing a small business involves juggling a number of roles, and bookkeeping is often the activity most neglected. Fortunately, modern accounting applications have grown increasingly user-friendly and can simplify the task for many entrepreneurs who are rarely inclined toward math. Using accounting software such as Quickbooks could save you much time and grief at tax time. Here is what you should know about selecting accounting software, and a few most popular programs used by Canadian business owners:
Before jumping into specific tools, it is worth mentioning that software alone will not catch everything, and many owners still pair it with guidance from Webtaxonline Toronto to make sure their books line up with what the Canada Revenue Agency expects at filing time. Good software handles the day-to-day recording, while a professional set of eyes catches the details that software cannot judge on its own, like whether an expense is actually deductible.
Know Your Business Needs First
The first thing to think about is the size and type of your business. A freelance graphic designer sending out five invoices a month has very different needs than a retail shop with inventory, employees, and daily sales. Some platforms are built to be simple and light, while others come packed with features for payroll, inventory tracking, and multi-currency support. Buying more than you need just adds confusion, so it helps to be honest about what your business actually requires right now, not what it might need in five years.
QuickBooks Online
QuickBooks Online remains one of the most widely used options among Canadian small businesses, and for good reason. It connects directly to most Canadian banks, calculates GST and HST automatically on your invoices, and has a huge network of bookkeepers and accountants already familiar with it, which makes it easy to hand off your books to a professional when needed. The learning curve is gentle enough for beginners, though the monthly cost can add up once you start adding payroll or extra users.
Xero
Xero is another popular alternative, particularly if you have many international clients or are after a more contemporary feel to your accounting package. It provides unlimited users on most plans – handy if multiple team members need access at the same time – and has an excellent marketplace of integrations to cover for time, supply chain and project management, so you won’t need to change if your business outgrows its current software.
Wave
For businesses that want something simpler and more budget-friendly, Wave is worth a look. It offers free accounting and invoicing, which is a rare find, and it covers the basics well, including income and expense tracking, invoicing, and basic reports. The tradeoff is that it lacks some of the more advanced features larger platforms offer, so it tends to suit sole proprietors and very small operations better than growing companies with several employees.
FreshBooks and Sage 50cloud
If you own a trades or construction business, or work in an industry where projects are your normal billing method, check out tools like Sage 50cloud and FreshBooks, both of which provide good job costing and project tracking functionalities. FreshBooks is a favorite with service companies due to its simple invoicing capabilities and easy ways to track billable time for use when billing clients on an hourly basis.
See also: How UK Businesses Can Cut Costs by Switching Business Electricity Suppliers
Essential Reports to Look For
Whichever software you choose, make sure it can generate the reports the CRA actually cares about, such as a proper GST/HST summary, a profit and loss statement, and a balance sheet. Being able to export clean reports saves an enormous amount of back and forth when it comes time to file, and it also gives you a much clearer picture of how your business is actually doing throughout the year rather than only finding out at tax time.
Why Bank Feeds Matter
Another thing which is easy to overlook but is a huge boon to streamlining your bookkeeping is the use of bank feeds. Nearly every contemporary accounting software can link directly with your company’s bank account and credit card, importing all transactions directly into your records. This means you don’t have to spend the time typing in every invoice and purchase, and however much time it takes it’s going to be significantly less than doing it manually. The important thing is to remember to go back and check these feeds periodically, instead of falling behind and having to deal with hundreds of transactions at once-it’s much easier to go through 10 every week than 2000 every few months.
Final Thoughts
Ultimately, the right accounting package for your business is the one you’re actually going to use day after day. A great tool that just gathers dust because it seems too complicated is pointless. Begin with a straightforward program that addresses the essentials, and develop a habit of consistent data entry and account reconciliation.
Choose a more advanced solution only when your business has grown out of the one it has.
Used in conjunction with occasional accountant consultations, you can rest assured that your books will be correct and your tax preparation will be hassle-free.
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