Not having a good bookkeeping system in place that would provide warning signs that the business could run out of cash is one of the main reasons businesses fail.
You can choose to set up a bookkeeping system manually (using accounting books), electronically (spreadsheets) or use accounting software. Unless you want to get familiar with bookkeeping practices, accounting software is the most efficient choice.
What to consider
Every business will have different requirements from an accounting software. When choosing an accounting software consider the following questions:
- Does the system calculate all payroll requirements (PAYG, annual leave, long service leave etc.)?
- Does the system track stock, work in progress, orders, jobs and other task management requirements?
- Will the system be able to handle multiple bank accounts?
- Does the system need to handle foreign currency?
- Does the system track separate financial records for each business or department within the business?
- Does the system allow for interface with other computer systems such as online payments?
- Does the system keep detailed records on customers including what they buy, how often they buy and when they buy (often referred to as a Customer Relationship Manager system)?
There are many software packages on the market that allow business managers to successfully control records without an accounting degree. Some of them, such as Free Accounting Software, have no cost. Some commonly used accounting systems used by small businesses are: