Accounting software made our lives a lot easier since they came around. Before we had to calculate everything manually and there was a lot of thinking involved, whereas now, it is (or it seems?) a lot easier to manage the accounts. So, WHERE IS THE CATCH?
There are many reasons why you should not trust accounting software, and there are many reasons why you should not attempt to do it yourself unless you have a solid knowledge about bookkeeping.
The latest MYOB advertisement makes us believe that is extremely easy to reconcile and keep a good record of your expenses “Oh, is that easy? Click Click, and all reconciled!” they say, and QuickBooks online and XERO do exactly the same: they set up a great adverting campaign and tell us to trust them, they will ‘take care of everything’. Ok, but, HOW?
It doesn’t matter how latest the version of your software is, or how many features it has, if you do not know how to allocate expenses or revenues, I can guarantee you that something will go wrong.
I was recently approached by a lovely business owner who decided to keep track of their books themselves. Their idea of processing expenses and allocate them was simply to take a picture of the receipt, and the software would have sorted it out itself. Long story short, when I went through their books it looked like they were making double profit (or so) than what they were making, and their expenses, on their books, were also a lot more than what they purchased. Why? Good question. The software does not do the job for you, the software simply helps you calculating, processing, and storing all info that you would have to store yourself otherwise. The bank reconciliation was also throwing them out of balance, and we had to look at ALL INVOICES and RECEIPTS since their business started.
So, are you wrong for trying to keep your own books? No, you are absolutely right! But before you do it, take some accounting lessons, and if you are not sure, reach out to your bookkeeper or accountant, they will be more than happy to help you allocate everything in the right category.
No bookkeepers or accountant nowadays will agree to keep your books manually, accounting software have many great advantages that you could benefit from, but if your accounting knowledge is limited, do not just trust the software, if they were that smart, do you think we would be around still?