How It Connects to the Previous Step
Now that you have set up a banking partner, you now need a system to record and track transactions, generate reports, and automate bookkeeping tasks. Without software, significantly more time is required and the manual errors and inefficiencies multiply.
What It Is & Why It Matters
Accounting software serves as the digital nerve center of your business finances. It streamlines tracking income and expenses, automates invoicing, reconciles bank transactions, and provides real-time financial insights.
By using the right software, you gain efficiency, reduce costly mistakes, and ensure compliance with best practices and tax regulations. The wrong choice, however, could potentially lead to inefficiencies, poor support or outages, compliance risks, and lost time.
How to Choose & Set It Up
- Identify Business Needs – Do you need payroll, inventory tracking, tenant related elements, or project-based accounting? What tools will I need to sync to this accounting tool to allow for easy connections? Make a list of essential features and tools you hope to integrate before selecting a tool.
- Compare Options – Consider cloud-based software like QuickBooks Online, Xero, or Freshbooks, depending on your business size and complexity. CNBC has an article exploring the advantages of the leading tools and additional information linked here.
- Integrate with Your Bank – Syncing your bank feeds allows automatic transaction imports, reducing manual entry and errors.
- Integrate with Your Other Suppliers – Syncing your CRM, property management tools, and other tech suppliers allows automatic recurring data imports and syncs, reducing overall manual entry and errors as well as time input.
- Customize Your Chart of Accounts – Ensure the software’s COA aligns with your business structure and activities, most accounting tools will suggest preset chart of accounts to get your started and from there you can add more detail as you would like, or your bookkeeper or your tax accountant recommend. There is more on this step in the next module to the accounting guide, Step 3: Building Your Chart of Accounts (linked below).
- Set Up User Permissions – If you have managers, employees or a bookkeeper, grant access based on tiered permissions or user roles to maintaining security preserve your business financial integrity.
- Add products, services, vendors, and your company information – This will enable you to quickly identify where a transaction should be connected to in the accounting system. Listing all of this information in your accounting system allows for better integrations and automations as well.
Risks of Getting It Wrong
Using the wrong software can lead to inefficiencies, higher costs, and compliance issues. Poor integration can result in missing transactions, difficult reconciliations, financial blind spots, and unnecessary tax burdens. Choosing software without scalability or integrations can also force costly migrations later.
Common Mistakes to Avoid
- Choosing Software With Too Much – If your business expands, you may outgrow a simple system or need additional features. Some firms are able to function with free tools or simple plans so be sure to avoid overspending on software.
- Not Automating Transactions – Relying on manual entry increases errors and inefficiencies. Many common accounting software tools have automation features to save you time and improve consistency and accuracy in reporting.
- Ignoring User Permissions – Failing to set access restrictions can lead to security risks and unauthorized changes.
- Skipping Training – Not learning how to use the software properly results in underutilization and frustration. Be sure to read the articles and supporting information when setting up these systems and engage in the communities when seeking specific support or more nuanced guidance.
Best Tools & Providers
- Recommended Software: Three providers stand out as consistent leaders in this space. These tools have wide ranging functionality, extremely low outage and downtime, as well as very large support resources and communities and reasonable pricing. We encourage you to review multiple options and points of interest specific to your needs before making your decision.
1. Quickbooks Online – https://quickbooks.intuit.com/pricing/
2. Xero Accounting – https://www.xero.com/us/pricing-plans/
3. Freshbooks – https://www.freshbooks.com/pricing
Why You Should Set This Up Now
Delaying software setup means more manual work, increased risk of errors, and difficulty tracking financial health. Automation is the key to scalability, consistency and accuracy are what make the accounting system valuable.
How It Connects to the Next Step
With software in place, it’s time to build out your chart of account so the bank activities flow to the proper accounts and your financial statements can align to your business activities.
ADC & Co. 