It takes me about 2 hours per month to do all my bookkeeping and billing. I have a studio of about 30 students that I run from my home. How long does it take you?
If 2 hours a month sounds like heaven to you, it’s time to choose (or change) your accounting program. What are your options and how do you decide?
The simplest answer: use the accounting program that your accountant likes best. Sounds silly? Perhaps, but remember, your accountant is the most important person in your life other than your family. You want a happy accountant. And, if your accountant is familiar with the program he or she will be able to help you set it up correctly.
Wait, what about Music Teacher’s Helper and My Music Staff?
Why didn’t I include Music Teacher’s Helper or My Music Staff in this list? Neither of these programs has the kinds of accounting functions that a small businessperson needs. They have value for certain aspects of your studio, but they are not good options for billing, bookkeeping or accounting. Stay tuned for more about them in the upcoming post about student management systems.
Here is a survey of some of the most reputable accounting programs out there. I am ONLY reviewing applications that were given good reviews on Audit Trail. Where I could, I fiddled around with the company’s demo data, and recorded how they performed. In my previous post, Choosing an Accounting Program for Your Music Studio, I made a list of the features that I looked for in accounting Software. You can read that post, which includes an explanation of “Audit Trail” here:
Quickbooks Desktop: $200-$250 every 2-3 years
The Gold Standard
I love Quickbooks. I use it to manage accounting, billing, and most of my student/family contact information for my music teaching studio. I could wax poetic about Quickbooks (yes, I am THAT nerdy).
Quickbooks is the standard by which all other accounting programs are measured. It does everything in my list in the previous post, Choosing an Accounting Program for Your Studio. It also does much more!
I can invoice who I want, how I want. With a little setup work, you can bill any group of customers on any schedule you could imagine.
I know where all my money comes from and where it goes. Canned reports (such as Profit & Loss) drill down to individual expenses or invoices with a click of my mouse.
My bank has a dedicated Quickbooks support team. I pay a monthly fee to be able to download my bank transactions, but this is TOTALLY worth it to me. I get stuck or something isn’t working I can call for help!
I can see my business at a glance. The Snapshots page shows handy graphs that compare my income and expenses from last year to this year
It saves me time in expense allocation. It learns from my behavior and pre-fills certain fields.
You could also process payroll for an additional monthly fee which depends on the # of employee.
Can you see why I love it so? And I had to cut this list of features in half so it would be readable!
And possibly most important: My accountant loves it, helped me set it up, and can help me when I have questions about it.
If you have a Mac: Quickbooks for Mac does not have 100% of the same functionality as Quickbooks for Windows. If you have a Mac, you will pay more for the software that does less. The main differences (other than look and feel) are that:
- The Mac version only works with USD.
- You cannot create an accountant’s copy of your file, but you CAN create a Windows-Compatible backup copy of your company file and send THAT to the accountant.
- It also does not have a Lead Center (track prospective customers) like Quickbooks for Windows.
However, Quickbooks for Mac has gotten much better in the past 5 years, and can do most of the things that Quickbooks for Windows can do.
If you choose Quickbooks Desktop, plan to upgrade to the new version at least every 3 years – after that long, they stop supporting it.
Quickbooks Online $12.95-39.95/month
Pay more to do less, but you can do it online
From the most trusted name in desktop accounting software, comes Quickbooks Online. It does nearly everything Quickbooks Desktop does, at least as far as a VERY small business is concerned. There are a few notable exceptions:
- The creation and grouping of scheduled recurring invoices is not as slick as in Quickbooks Desktop. You could still get it to do what you want, but there is more work involved and more chances for data entry errors.
- You have be on the $26.95/month plan to be able to schedule automatically recurring invoices. So, if automatic invoicing is something you want, you should just buy the desktop software. After 7 months, you’d come out ahead.
- Online only works in USD
- Online does not have a Lead Center
Quickbooks Online doesn’t have as many bells and whistles as the desktop version, but it is automatically backed up to the cloud and accessible on your mobile device.
But consider: if you are already backing up your computer the cloud backup is moot. Secondly, do you really want sensitive financial information on your mobile device?
If you have only a few students (i.e. if automated invoice creation is not important to you) and you are only working in USD, Quickbooks Online might be a better option for you. And, when you’re ready, it will be easy to transfer your data into Quickbooks Desktop.
You can see a Side-By-Side comparison of the Quickbooks products HERE
You can’t argue with FREE!
The big selling point of Wave is that its basic version is free (if you don’t have any employees and you don’t require any technical support). It does nearly everything in my list. One thing it doesn’t do is allow you to separate your income/expenses into different “Classes” (such as gig income vs. teaching income) and get separate reports by class. However, if you don’t care about separating your income by class—no problem!
What you pay for, with this application, is live technical support and payroll support for your employees. If you want chat support, it’s $5/month, phone + chat support is $19/month, and you can get a discount on buying 3 months of phone + chat support at a time. You pay an additional monthly fee for activating payroll, and the amount will depend on the number of employees.
There is no monthly fee for downloading bank or credit card transactions, BUT if there is a problem with the download, your bank probably can’t help you.
The scheduling of automated invoices is less slick than Quickbooks Desktop, but equivalent to (and cheaper than) Quickbooks Online. Also, it does one thing Quickbooks Desktop DOESN’T do—send automatic reminders!
Credit card processing is done through Stripe.com for the standard fee (2.9% and a $0.30 per transaction fee is typical).
You can give your accountant his/her own login for your wave account, and Wave has a list of accountants who work with their product.
Wave has no Lead Tracker for tracking prospective student data, but this is a nice-to-have feature not a requirement.
Nice features, one big problem.
Developed by GoDaddy.com (or perhaps acquired by GoDaddy.com? It’s hard to tell which), Outright.com has most of the functionality you would need. It includes most of my list with the exception of tracking and separately reporting on “classes” (i.e. different segments of your business). Again – if you’re not a total geek like me, you may not care about that! It does have one big problem, which you can read about below.
It integrates with Paypal, Dwolla, Stripe, and more—this is a pretty nice feature, and it would certainly make matching payments to invoices easier. It’s unclear whether you can transfer funds from your Paypal account directly from Outright or whether you’d still need to go via paypal.com or paypal mobile.
It gives you running updates of your estimated taxes and sales tax due, which is nice when you’re wondering how much of that cash you can spend. CAUTION:Always consult your accountant about estimated taxes – last year’s income has a bearing on this number as well.
It has good flexibility in naming income and expense accounts – which is nice when you’re running a business with unusual account names like a music teaching studio.
There is no Lead Tracker function. However, if this is not a big deal for you, no problem!
The Big Problem:
It does not support unique login credentials for multiple users on the same account. You would have to give your accountant your login and password for him to see your books. OK, I know you REALLY trust your accountant, but this is a pretty big security risk. All the IT people I know would choke on their coffee that a tech company is actually recommending this. There are good reasons why you’re NEVER supposed to give your password to ANYONE, no matter how much you trust them. Having spent 10 years in HR, I have seen such things go bad many times. Honestly, this would be a deal breaker for me.
The Alternative to Quickbooks (but only in 7 states)
Xero is the cloud based application that has all the bells and whistles, and touts itself as the “Alternative to Quickbooks.” They’ve won several awards for ease of use and innovation. Their starter plan, at $9/month does so little it’s hardly worth mentioning. Their smallest robust plan is $30/month and includes payroll for 5 employees. It does everything in the list, and could be configured to track student leads.
At a functionally minimum price of $30/month, I think it should fix you breakfast in bed, but alas, I did not find this in the list of features.
Seriously, though, there are a couple important things to note: Xero does not charge you by the employee if you use payroll, which is a nice feature. But there’s a catch: They currently (as of October 2014) support payroll in ONLY 7 states: California, New York, New Jersey, Texas, Florida, Virginia, and Utah.
Bottom line: If you have only a few employees in one of these states, or if you really hate Quickbooks, this might be a good option for you. If you have no employees and/or you aren’t in one of these states, go with a different accounting program.
You Did It!
Wow, you made it all the way through my Accounting programs survey! You deserve a cookie for sheer stamina! I hope this has helped you make a decision!
Next time: Insurance for Music Instructors