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Accounting Software Alternatives to QuickBooks

Starting a business is filled with challenges. As your business grows more challenges appear. While you focus on your product, distractions temp you from your course. Bookkeeping, accounting, and payroll are some of the worst offenders.

The biggest name in accounting is Intuit’s QuickBooks. They have a desktop (QBD) and online version (QBO). Unfortunately, the biggest name in the industry does not correlate with the best product. Intuit has marketed their QuickBooks products well. However, most tax and accounting professionals find the QuickBooks system unacceptable.

The claim that QuickBooks is the leading product with professionals is a product of client usage, and, once again, marketing. Strip away all the venier and you can see the endless complaints in accounting and tax peer groups.

What most business owners don’t know is that there are better choices. Sometimes it takes creative thinking to get your books accurate without spending large amounts of time. You want accurate records for your tax professional at tax time. You want good records for the bank when seeking financing. You want an easy tool for invoicing and fast payment from customers. And if you have a business with inventory, you want a tool that manages inventory easily and accurately.

It isn’t too much to ask for all these tools. It does require thinking differently than Intuit wants you to.

Best of all, these tools can cost a fraction of QuickBooks and do more, faster, easier, and better.

QuickBooks is not always the best choice for the small business owners when it comes to inventory management. Success often is determined by building the right accounting system.
QuickBooks is not always the best choice for the small business owner when it comes to inventory management. Success often is determined by building the right accounting system.

Modular Thinking

We have been taught to think of accounting as one big all-encompassing tool. Every CPA knows accounting is modular.

Accounts receivable and accounts payable are two modules. Large corporations literally have departments for each. These departments work within modules that eventually become part of the whole financial reporting process. But every hand is not inside the main software with each transaction.

Payroll is also a module. Inventory another. Each module serves a unique purpose.

The reason I need you to think in modules is because QuickBooks has probably convinced you each of these modules must come from them to be fully integrated. While all the modules do integrate at some point to build comprehensive financial statements, each module has an important task that should not interfere with the tasks of other modules.

Since this article is for small business owners we will address accounting from the small business owner’s viewpoint.

At its most basic, accounting software must provide at least three statements:

  • Profit & Loss Statement, sometimes called the Statement of Revenue and Expenses
  • Balance Sheet, sometimes call the Statement of Financial Condition
  • Cash Flow Statement, sometimes called Statement of Cash Flow or Consolidated Statement of Cash Flows

QuickBooks does a reasonably good job of recording revenues and expenses. Inputting assets and liabilities help in building the balance sheet. Many free and low-cost online software does exactly the same thing without extra bells and whistles that complicate the process. I’ll provide several suggestions of software to consider below. That will be a good starting point for you.

Once the basics are nailed down the rest is determined by your specific facts and circumstances. You don’t need a payroll module if you have no employees. Having QuickBooks waste your time reminding you to pay for their payroll service is an added cost paid for with your time. And time is more valuable than money since everyone gets the same 24 hours every day. Once wasted it is gone forever. Wealthy business owners eliminate these sources of time waste.

Once you determine the modules you will need you need to determine which tasks can be managed within each.

At the most basic level, you want the ability to import bank statements so reconciliation of said statements is fast and easy. It should be error-free! If you are here reading this it may be from the less than error-free functionality from QuickBooks as it pertains to importing bank statements.

Here is the really neat thing about accounting. You don’t have to use the same software for each accounting task. Inventory is a good example. QuickBooks is not the easiest (or best) inventory management system to use and many business owners and accountants find it time consuming and filled with opportunities to really mess up all the accounting records.

We will discuss inventory separately below. For now, understand you can use a completely stand alone inventory management system. If you run a retail business or manufacturing business with work-in-progress it is practically a necessity. The best part is it seamlessly integrates with your main accounting system.

QuickBooks Versus the Modular System

Intuit’s attempt to be everything for everyone is the root of many problems with their software. Accounts receivable and accounts payable are all in the system at the same time. So are the inventory guys. And sales, so they can send invoices.

QuickBooks’ answer to this problem is to force a switch between multi and single user modes (in QBD). Unfortunately this doesn not fix the problem of each part of the program affecting other areas of the books. Couple this with attempts to upsell at every point and glitches set in. Before long QuickBooks is the barest of functional, but it does maximize profits for Intuit.

The modular system does away with one vendor controlling the entire process. Yes, many of the processes will be with one vendor for small businesses. Still, the ability to easily switch as your business grows is vital. Often a specialized module is needed due to the type of business you have. Switching one module as your business grows is easier than transferring your entire system.

If you already use QuickBooks and want to change to something better, know that most of accounting software allows for importing of your QuickBooks data. Some software companies help with the process, most have videos that walk you through the process.

Module Integration

If you have a standalone module you still need to get the data into the main accounting software.

Inventory is a good module to use for an integration scenario. Inventory for a homebuilder is different from a manufacturer, which is different from a retail store (online or real world). A one-size fits all inventory management system risks an error will be made and the consequences reverberate throughout your accounting system. Inventory often requires a specialized module because an inventory program that attempts to serve all needs will be cumbersome. Focus is vital.

Most standalone inventory systems will integrate with other accounting software. If you want a certain inventory system that doesn’t integrate with your main accounting software choice, there is a simple solution.

Inventory is listed on the balance sheet. At the end of each month you make a simple adjusting entry to bring your inventory on the balance sheet into line with the inventory program. A retail store may have one simple transaction, whereas a manufacturer may have a few more entries to account for work-in-progress from raw materials to finished goods. As always, facts and circumstances prevail. Just know that an inventory management system does not need to integrate with your main accounting software for accurate records.

Payroll is another excellent example. A standalone module or third-party payroll vendor still needs data entered into your main accounting software. The third-party vendor or separate payroll software can provide detailed reports and file tax documents. The financial statements only need the amount of the transaction. You can enter all payroll expenses as one item. Because you will need the detail when reconciling the bank statement, many business use a separate checking account for payroll.

Of course I can go on with all the different ways accounting is performed. Instead, I want you to understand the mental process of building a functional and useful accounting system for your business. I have provided building blocks. You now need to construct your accounting system to fit your needs.

We will now turn to a variety of vendors for your consideration. With the exception of ADP (payroll) none of these suggested vendors is an affiliate. The goal is to provide useful tools that will help with your due diligence in building an accounting system that works for you.

Your accounting system must be seamless, accurate, and easy to use so you can focus on running your business and making a profit.
Your accounting system must be seamless, accurate, and easy to use so you can focus on running your business and making a profit.

Accounting Software Alternatives to QuickBooks

First, just because an accounting software package offers multiple modules, you can still take a different path, using better modules from other sources! Payroll, inventory, invoicing, and more are frequently available with each online software choice. Those built-in choices are designed for a broad audience and may not be the best choice for you. A modular accounting system is built from components. You are not married to any one vendor for all modules.

Basic Accounting Software

Xero, Zoho, and Wave are good starting points for your research. NetSuite is more than most small businesses need and can get expensive. Kashoo has not been a favorite of mine because, as a tax accountant, I am on the receiving end of the financial statements and clients using Kashoo have been a challenge. Still, it may work for you. The key takeaway is that this is a starting point. A Google search can help you find more alternatives and specialized accounting software for your industry.

Also note that many businesses are unique. Conferences and peer groups can unearth possibilities. Your industry may already have an accounting system most use. It is easier to uncover what already works over reinvesting the wheel.

And always keep your accountant in the loop! She can help you build an accounting system that works for you. If you don’t have a dedicated CPA, you can ask your tax professional or bookkeeper. These people work with these materials and software all the time. They are your best friend on creating and keeping clean books.

Invoicing

Trulysmall is part of the Kashoo universe; ChargeOver is for a specific use: subscription invoicing.

All accounting software offers basic invoicing. If your needs are specific you will need to review other invoicing software. Many small businesses don’t need more than a basic invoicing system. Restaurants probably may do no invoicing at all. Facts and circumstances, always. The point is that you are aware there are tools available regardless your specific business needs.

Inventory

I only provide one offering here. Often inventory software is built specific to an industry. Just be aware there is a tool for your inventory needs.

Payroll

Payroll Mate handles payroll without issues, in my experience. Real Business Solutions (the company behind Payroll Mate) also has products for filing 1099s and more.

Since my practice has clients all over the U.S., I need a payroll provider for businesses outside my home state and for other payroll services my office does not provide. ADP is the third-party payroll service with the fewest issues over the years in my office so I recommend them.

Also consider local payroll services. The local personalized touch is often the best choice

There is no one accounting system that serves the needs of every business. The attempt by QuickBooks does provide a functional system for many businesses, but at a significant cost in time and money.

Building the right accounting system can increase profits by lowering expenses, saving time, and keeping accurate financial records. Your tax professional will thank you at tax time and pristine records make a difference when it comes to financing. Managing your company is also easier when you have an accounting system that works.

Now you need to start your due diligence, finding the right modules for your specific needs.

Nate

Monday 17th of June 2024

I use Freshbooks for my professional services business and works great!

RichardP

Tuesday 11th of June 2024

Sound advice. I worked at a steel company with no manufacturing - we were a regional sales office for the steel mill that owned us. We had to have a lot of information attached to each skid of steel so we had a custom-made inventory solution which exported data to a commercial accounting package. Payroll was too much of a hassle for a small office so we went third party (specifically ADP).

Aaron

Monday 10th of June 2024

Agreed! I tell my clients that QuickBooks is a jack of all trades, master of none. I've learned the hard way! QBO can be great for categorization of transactions (if you're willing to work through the constant glitches and bank integration disruptions) but that's it.

Aside from that, Gusto is by FAR the best payroll system. For AR, AP, and Inventory... investigate the industry specific products your competitors already use. Don't you dare use QuickBooks for these :)