When deciding to get your small business’s accounting in order, there are a few stand-out pieces of software to choose from. In this week’s tip from Tyler, we’re discussing Xero, Quickbooks Online, and how to choose the right system for your company. (If you’re considering switching to a new accounting system to work with a specific firm, check out this blog post.)
While there are several options to choose from to formalize your accounting (even a manual-input Excel spreadsheet), the two most popular in the e-commerce space are Xero and Quickbooks Online (QBO).
Neither is a perfect system, and neither solves every problem you may encounter – for example, Seller Accountant doesn’t use the inventory module on either system because it’s usually not adequate for e-commerce inventory demands. The monthly cost is also similar, at around $50 for both systems.
How to Decide Which System Is the Best Fit
When choosing which system is best for your business, it’s best to start with what you know. If you’ve been doing your own accounting and plan to continue to do so, you may want to keep the system you’re familiar with if it still meets your needs.
If you’re not very familiar with your current system, you don’t do your own accounting or plan to outsource in the near future, or your current system doesn’t give you all the functionality you’re looking for, it might be worth it to try another. It’s not worth the sunk cost to keep using a system you’re unhappy with.
If you plan to hire out for your accounting, your accountant likely has a system they know better than others, and it’s worth it to allow them to continue with their favorite system if it means they’ll be more efficient and comfortable working with your books. If you’re dead set on keeping your current system but still want to outsource, you can search for firms that work solely with specific systems; for example, Seller Accountant uses QBO exclusively, but MuseMinded is a Xero-based firm.
Why did Seller Accountant choose QBO?
As we mentioned above, if you’re comfortable with a certain system, don’t reinvent the wheel when choosing an accounting software for your business. Because Seller Accountant CEO Tyler already knew a fair amount about how QBO operates, he based Seller Accountant’s business model around that particular software. Tyler also preferred the reporting and integration options of QBO slightly more than Xero, but the difference between the two was not significant.
In addition to a better understanding of QBO, Seller Accountant wanted a more refined niche in which to operate. Since other firms already had the Xero market cornered, it made sense to focus the business on Quickbooks users.
Overall, it’s best to use a free trial of any service you’re considering, as the decision will ultimately come down to personal preference.
NetSuite – A Large Seller’s Alternative
If you’re running a mid-size company or larger, you might want to consider an ERP, or enterprise resource planning, product. An example of this is NetSuite, which is a mid-market system that isn’t quite an ERP but integrates more functions than just accounting.
NetSuite is significantly more expensive than QBO or Xero (think five figures over the course of the year), but if your business is too large or complex for QBO or Xero, an ERP or ERP-adjacent program might be worth the investment.