Those looking to start or grow a small business inevitably run into the accounting systems vs Excel worksheets matchup when tracking their finances. If you have ever wondered about the capabilities of the two and what would be best for their business, then this article is for you. Identifying which options you can realistically use in your business will help with proper record-keeping for end-of-year taxes and much more.
Which is Better?
This is a question that is always asked as small businesses are about to start, which way is the best way to go: a big (sometimes costly) accounting system or a small, simple spreadsheet that can keep track of everything that is needed at the end of the year? From my time spent working with accounting software and knowledge of spreadsheets, there are arguments supporting both options for small businesses. However, at the end of the day, an accounting system seems to be the best way to go about your bookkeeping needs.
Some points against using spreadsheets are as follows:
- Excel formulas are complex and prone to error. Accounting software handles all the calculations for you, and does it properly.
- Excel spreadsheets are susceptible to fraud because it’s easy to change information and hard to keep track of who’s making the changes, whereas accounting software maintains an audit trail.
- Spreadsheet errors are easier to make (copy/paste errors, moving content out of cells that other formulas base their calculations on, etc.), and are much harder to track down.
- Each income stream requires a different spreadsheet to track your earnings. This means that as you start offering more services, the number of spreadsheets will increase, and this can become confusing.
One of my favorite things about an accounting system is the ability to create a multitude of different reports to see your business from many different angles. There are built-in reports for Income Statements and Balance Sheets as well as reports broken down by vendor, sales item, and more. Fundamentally, accounting software is built to ensure you record your accounting data effectively with minimal mistakes and good auditing. Keep in mind, you still need to use the tool properly to get the benefit. Another advantage is that many accountants and bookkeepers are more familiar with accounting systems and can help with any discrepancies that may arise.
Help is Available
I am a Certified QuickBooks ProAdvisor and I also have experience with other platforms. Additionally, I can help with excel worksheets and to see if an accounting system would be right for your business. To get started with our no-cost, confidential assistance, contact your local advisor or click here to register as a first-time client.
About the Author: Rob has experience in commercial banking, Accounting Systems, and he speaks Spanish. As someone who loves seeing small businesses succeed, Rob enjoys the journey a small business takes from start to finish. When he is not on the road or meeting with clients, Rob enjoys spending time with his family and enjoying the outdoors, hunting, or fishing.