We all need an accounting solution for your business. We need to know, at the very least, how much money is coming in and how much money is going out. To prepare taxes we need to keep organized and know what expenses are business related, which ones relate to the cost of good sold and more.
Rob Maurin of Wave Accounting gives me some of his advice on on accounting solutions for small businesses.
How can a business know what’s best for them?
Picking an accounting application or money management tool is kind of like setting an exercise program, in the following way: the best one is the one that you’re going to stick with. I could come up with a list of everything a small business owner SHOULD do, in a perfect world, but if the business owner doesn’t follow through the list is worthless. So things to keep in mind are:
Does your accounting tool really make your life easier? As easy as it could be? New technologies like bank data importing can really cut the pain out of accounting. Ease of use is the number-one factor influencing whether or not you’ll stick with an accounting application. There’s no sense paying $200 for a box of software that you’ll never learn to use.
Will you be bringing in a pro, like an accountant, to do the tricky things like tax prep and regulatory filings? If so, make sure your accounting tool makes that process easy. If not, make sure your tools are up to the task.
Does your accounting tool lock your data up? Are you held hostage to your data, or can you switch easily if you ever decide you need or want a different tool?
Many of the online services are free (or freemium) is this a viable business model? Will they last?
Obviously we think Wave’s free model makes sense. I’d question, of course, how long a paid product will last when there are very good free products available.
I’m not a fan of freemium, personally. In many cases that means that the allegedly free version is no more than a teaser, with unrealistic caps on usage or functionality.
I also think there are better ways of making money than asking small business owners to fork out hundreds of dollars a year.
Will free products last? The great thing about the online world today is that free can be a very viable business model. Look at Gmail. Look at Facebook. On the personal finance side, look at Mint. Free means you can build scale, and with that you can build revenue.
I wouldn’t want to go the Facebook route, where you build something cool and figure out later how you’re going to monetize it. You run the risk of having to shoehorn things where they don’t belong. But Wave is fully conceived as a free product, with a corresponding business model, and I love the way the pieces all work together to give us a very healthy business while making our customers ecstatic with a no-cost accounting tool.
Are some cash management tools good for some businesses, while some are not good for others? What about Wave Accounting?
Part of this answer ties back to the first question. If you’re going to use it, and it’s going to simplify your life, it’s a good tool.
If I understand your question properly, I’ll say this: One of the differences among tools out there is just how far they go, and at what price?
– Is it an expense tracker? Or a proper accounting solution?
– Is it full double-entry accounting that will satisfy the needs of accounting professionals, or a scaled-down or simplified version?
– Is it free, freemium, just a trial? And what are you getting at that price?
This is one of the most exciting things about Wave. It’s all this and more.
– Wave is a full double-entry accounting tool.
– You can use just the expense tracker functionality if you want.
– Even if all you focus on is the expense tracking and invoicing, you’ll still have most of your accounting done right! When your accountant comes in for the home stretch, so much will already be properly accounted for, the rest of the work is clean and easy.
– As I’ve mentioned, all of this is free in Wave. We may in the future roll out components BEYOND accounting for which there’s a cost. Or maybe it will be free, too. We’re still working out those details. But the core accounting, invoicing and expense tracking tools will remain free. And that’s all that most small businesses need.