For many years, desktop-based programs have been the standard when it comes to bookkeeping. However, as technology continues to evolve, more and more small businesses are utilizing cloud-based apps to maintain their records. So, how do you decide whether a cloud accounting app is more beneficial for your business? In episode #118, Gene Marks and Elizabeth Larkin discuss the merits of different cloud-based accounting apps for small business owners.
1:51—Today’s Topic: The Latest Cloud Accounting Apps for Small Businesses
4:10—While not a requirement, it is important to note that desktop accounting programs will become obsolete in the years to come.
4:33—Cloud-based accounting apps offer easy access from multiple devices as well as automatic updating.
6:19—If only one or two employees require access to your books or if your business only requires the most basic functions, a free accounting app will suffice.
6:43—Xero is ideal for business owners who would like an accounting app that will integrate well with multiple systems, including their CRM system. Your employees can learn to use it easily, without any major training.
8:44—The online version of QuickBooks allows the users of its desktop version to easily transition to a cloud-based platform.
10:25—Originally an app for invoicing, FreshBooks has evolved to provide a comprehensive range of accounting capabilities as well.
11:20—Your data is more susceptible to security breaches if it is saved on your desktop than when it is hosted externally because the companies behind these cloud-based apps specialize in protecting your business records.
12:48—Regardless of which cloud-based service you use, you will always have legal ownership of your data.
13:54—You can easily provide your accountant with access to your books from multiple platforms.
18:50—Gene explores some of the unnecessary stress that “unlimited vacation” can actually place on your employees.
- Will an Unlimited Vacation Policy Work For Your Small Business?
Submit Your Question
Elizabeth: Welcome back to the Small Biz Ahead Podcast. This week we’re talking about small business tech. So every … Once a month probably we do an episode dedicated to the latest and greatest small business tech. And I always tell this story whenever we start one of these episodes. I was at an event where Gene was speaking and he was going over just different apps and web applications that small business owners use that he uses in his business. And the audience was so thrilled and they were taking notes like crazy and he waited until the last 30 seconds of his presentation to say, “Oh by the way I have a PowerPoint. I printed it out. You’re going to get all of these ideas written down for you.”
Gene: As it turns out they weren’t really taking notes. They were all tapping text messages to their friends and on Facebook and all that anyway so.
Elizabeth: No. These people had notebooks out and putting pen to paper.
Gene: Fair enough.
Elizabeth: Writing everything down.
Gene: Fair enough.
Elizabeth: And then Gene’s like, “Oh, you didn’t have to write anything down. I did it for you.” So we had someone write in with a question once saying, “I was at that event and I’m just wondering. How do I keep up with this? I’m not reading wired.com or one of those tech sites to find out what new apps are out there every day.” So Gene and I committed to doing an episode once a month to talk about a different type of cloud solution or app or something that you could be using for your small business. So today after we hear from our sponsor, we’re going to be talking about cloud accounting solutions. And Gene has three recommendations for small business owners. So we’ll be right back after we hear from our sponsor.
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QUESTION: Do You Need a Cloud Accounting Application?
Elizabeth: Okay. We’re back and I want to hear your first suggested apps for small business owners.
Gene: So we’re gonna be talking about cloud accounting applications.
Gene: Right? So first of all there are many good applications out there. So should we start? Do you want to talk about the specific applications or?
Elizabeth: Well first of all I actually want to ask you before we start. Why do you need a cloud accounting app? Is it just easier?
Gene: Well you know Elizabeth, here’s the reality of the road. Okay? You don’t need a cloud accounting application. You really don’t need it. It’s just that the accounting software vendors are going to require you to have it.
Gene: And the reason why is because it makes them a lot more money for you to subscribe to a cloud.
Gene: Back in the day, you could buy QuickBooks for a couple of hundreds bucks-
Elizabeth: And install it on your computer.
Gene: Install it, use it, it’s all good it’s whatever. Maybe five years later you might want to upgrade it that’s fine. Now you’re not doing that. You’re paying 100 bucks a year for the online version.
Elizabeth: Just so know too if you did buy like a CD-ROM or something. And you need to hold onto those for your taxes.
Elizabeth: For like, what is it? Seven years or something.
Gene: Seven years. Yeah yeah.
Elizabeth: So you need to find that old … Oh gosh people are going to be running to their filing cabinet now. In case you get audited you do need to have that original installation disk, so you can access your old files.
Gene: Yeah. Get access to the data. Although a lot of these … Let’s take a step back. If you’ve already got an on premise application, if you’re using QuickBooks or something like that and then you go to a cloud accounting app, a lot of them migrate the data.
Gene: So you might be in good shape. If not you definitely want to make sure that you’ve got access to that data in case you ever get audited. So the answer to that question about, why do you need a cloud accounting app? It’s not like you really need it-
Elizabeth: It’s easier though.
Gene: It’s just that … Yeah. It’s just that we really have no choice.
Gene: You could still buy the desktop apps, they’re still available. But trust me in the next few years, they’re going away. And the cloud accounting vendors are driving that. So that’s number one. Number two you said like they’re still, they provide certain benefits or whatever. Yeah. There’s some great benefits that the cloud accounting apps provide that a desktop app doesn’t. For example, you can do invoicing wherever you are. You can do time sheets wherever you are. You could pull up information on your laptop or on your iPhone, or on your iPad or any device that you have. Wherever you are as well. You can check on employee payroll wherever you are. You could be doing data entry, like if you place an order. You could be taking notes on a customer. What the Cloud does is it’s all mobile which is great news.
Gene: The other thing that, which it does which is this is really really important for all of us as well, is that there’s no more upgrades you have to worry about. I mean, yeah back in the day I talk about, a few hundred bucks you would buy QuickBooks and whatever. Well upgrading was always a pain.
Elizabeth: Oh God. And then every time you’d start your computer you have to wait for the upgrades to download.
Gene: Yeah absolutely.
Elizabeth: It’s crawling.
Gene: And something would mess up in the middle of it and there would be a problem. Now the cloud accounting vendors they’re pretty savvy and what they do is, the upgrades just happen automatically.
Gene: There’s some new feature or whatever, you just have it that day. You’re not waiting for the next version-
Elizabeth: That’s probably better-
Gene: To come out.
Elizabeth: For virus protection too because they’re taking on-
Gene: I believe the security is a lot better.
Gene: I think that’s great. And the other thing when you’re in a cloud based world, there is a lot of integrations that you can take advantage of that didn’t really exist before. I mean it’s a more higher end time and billing systems, or inventory management, or purchase orders, or even the link to your phone system or to a CRM system. When you had your own internal database that was on your desktop, very tough to integrate that with other stuff. Now that it’s in the cloud it’s much more easier for those applications-
Gene: To talk to each other. And because of that they all have all these incredible apps that integrate and do like certain little functions that-
Elizabeth: They make your life easier.
Gene: They do make your life easier. So there’s a lot of benefits to being in the cloud. Don’t get me wrong but it’s just, we don’t have a choice in the matter anyway. We’re all moving towards the cloud based application.
QUESTION: How Much Is Cloud Accounting Software?
Elizabeth: So what kind of pricing should a small business owner expect if they’re moving to a cloud accounting software?
Gene: So some of the more popular one’s that are out there and I’ll talk about a few of the shortly, they offer free versions.
Gene: So it can be free if there’s just one or two users, or you don’t need that money kind of capabilities. Basic bookkeeping or billing. It’s free stuff.
Elizabeth: So for the Marks Group I know you have a bookkeeper that you use.
Gene: We do.
Elizabeth: So I’m assuming she has access and you have access?
Gene: I do. I do. Now we don’t have the free version. We use a product called Xero. It’s X-E-R-O.
Gene: It’s one of the applications that I recommend.
Elizabeth: Okay. Let’s talk about Xero then.
Gene: Sure. So Xero is a cloud based accounting application. And the pricing it ranges anywhere from 10 to I don’t know 30 or 40 dollars a month a user depending on what plan that you get.
Elizabeth: Is it just you and your accountant that have … Okay.
Gene: It’s just me and my accountant right now.
Elizabeth: Yeah. I mean you’re a bookkeeper.
Gene: Yeah. But we would … It’s only us right now but we are gonna be integrating it with our CRM system and so therefore we are gonna be probably opening up to other people to get into. But right now there’s only the two of us that really need to be looking at it. So all in all when all the smoke clears it costs us a few hundred bucks a year.
Gene: But because it’s a cloud based application and we’re using it for our billing. We’re using it for accounts payable, we’re using it for cash receipts, we’re using it for all disbursements. Cloud based applications like Xero integrate with out bank. We have a Wells Fargo so we’ve integrated it with that as well. And we’ve also integrated it, or we’re in the process of integrating it with our CRM system which is Zoho.
Elizabeth: So how does she … Your bookkeeper I forget her name.
Elizabeth: We’ve talked about her before.
Gene: Susan yep.
Elizabeth: So what kind of training did you get her for this? Or is it just so easy to use that-
Gene: She just kinda picked it up on her own.
Elizabeth: She just picked it up?
Gene: Yeah. She … There is plenty of training that’s out there if you’re gonna be spreading this stuff up among other users. But she picked it up and learned it herself. She’s a longtime QuickBooks user.
Gene: So the learning curve was really not that big a deal.
Elizabeth: I’m assuming that all of these apps that we’re gonna talk about including Xero though probably have extensive like how to and training-
Gene: Tons of resources online.
Gene: Once you sign up for them and they have like YouTube videos. And then they also have like a whole partner community.
Gene: So Xero has got a bunch of accounting partners that will help you set it up and implement it and train. If you’re gonna be using it for anything more complicated than what we’re doing right now. Xero is great. It’s very popular around the world. It’s … Like I said it’s a low cost but powerful cloud based system with a lot of partners that it integrates with.
Gene: So Xero is one. QuickBooks Online is the biggest. A lot of complaints about QuickBooks Online. Some of them fair and some of them are unfair.
Elizabeth: People really prefer … Because we’ve touched on this topic before on Small Biz Ahead and people leave comments on the article and several people have said they really preferred the desktop version.
Gene: Yeah. So QuickBooks was a little bit new to the game when it came to cloud based accounting. They are very much sort of a desktop version company. QuickBooks online has now been around for a few years. It’s not like some kind of immature product. When it first came out, the first couple years Elizabeth, people were like, “Oh. It doesn’t do everything the desktop does. Or I don’t like the interface. Or it’s not as quick.” This and that. And those opinions were certainly justified but to Intuits credit, Intuit is a big company.
Gene: A lot of customers, a lot vested in this.
Elizabeth: I’m sure they’ve got a ton of engineers working there on this.
Gene: Absolutely right. So it continues to improve everyday. And plus the thing that I like about QuickBooks Online is that you’ve got Intuit behind it. You’ve got a huge community of people behind it as well. And a huge marketplace of products that integrate with QuickBooks Online as well. So it is, although QuickBooks or Intuit right now is offering different versions of QuickBooks that are still desktop as well as online, trust me when I tell you, it’s all gonna go online eventually.
Gene: If you’re still resisting making that move, you’re fighting a losing battle. You are ultimately gonna go online and QuickBooks Online is very, it’s very very good. Now Xero, the guys at Xero will tell you otherwise. They’re like, “Oh we hate QuickBooks. And ours is that much better. And our interface is this and that or whatever.” And that’s fine. It’s up to you.
Gene: They’re both very very good.
Elizabeth: And what’s your third suggestion?
Gene: I like FreshBooks is also-
Gene: A nice one.
Elizabeth: Yeah. I’ve heard of them. They’re very popular.
Gene: It came up really more as like an invoicing application but now has evolved to more-
Gene: Accounting functionality. And it’s excellent and … My suggestion for, I’ll tell you this much. If you’re a small business and even if you’re retail, if you’re a restaurant, if you’re a service – but you’re a small business. Maybe a dozen or so employees or a little bit more or less. If you get QuickBooks, Xero, FreshBooks, InTacct is another one that’s very very good.
Gene: There’s other one- inDinero is another one that I like. You’ll be fine with any of those applications. They’ve been around.
Gene: They’re mature, they’re good. It’s really what your bookkeeper, your accountant really prefers to use. If you set it up the right way and people are trained to use it the right way, and if you’ve got the right reports coming out of it. In the end you’ll get the information out of it that you need.
Elizabeth: One comment that we always get from small business owners when we talk about this is security. A lot of people felt that their desktop applications were more secure than the online applications.
Gene: Right. And I think that is absolutely false. I think that your database that you have on your desktop is probably more exposed to security issues than if you were having your data hosted by another company. And let’s admit it as small business owners, we stink at security. Okay? We’re not really great at securing our data. I’m not. We’re not really great at updating the security software or protecting it against potential hackers and all that. We’re just not. Whereas these companies, this is their livelihood.
Gene: This is … So I’m not saying they’re 100% secure, they are certainly not 100% secure but they are employing people a lot smarter than our smartest IT person. You haven’t met my IT person. Trust me they’re are plenty of people a lot smarter than this guy, to make sure that their data is secure and distributed and protected and all of that. And like I said while not bullet proof, Intuit, Xero they cannot have significant security breaches and then continue on as a functioning company. It’s that important to them.
Elizabeth: It’s almost like a partnership because if you’re storing your own data, you’re invested in keeping that secure. But if they’re storing your data you’re invested in it and they’re invested in it.
Gene: Yeah. It’s true. It’s true. And they’re … That’s what they do. It’s just what they do for a living. Now one question that’s come up among clients is the ownership of the data. Back in the day Elizabeth it really truly used to be where if you had a cloud based system, it wasn’t your data anymore. You know?
Gene: That the cloud provider had the data and you were lucky if you could get access to it. Or what if you wanted to move systems or whatnot? That’s not the case anymore. Okay. It’s all your data. So if you’re working with any of these cloud based providers for your accounting software, there’s a bunch now, there are a bunch of export and migration and integration tools that bring all the data out of those systems. Not only that but they’ve all kinda given in and opened up their databases so even their competitors. Like if you go to Xero for example and you’re already on QuickBooks, Xero has tools that will sweep up all of your data into Xero without you having to export it or anything like that. So that is, it’s an old school myth-
Gene: That you don’t have access to your data. You do have access to you data in a cloud based accounting application.
Elizabeth: Okay. My final question on this, and this might be really really basic but I’m gonna ask it anyway is, how do you work with your accountant? So your accountant doesn’t have access to this?
Gene: Yes he or she does.
Gene: Absolutely yeah. That’s the other-
Elizabeth: They have their own login?
Gene: Yeah. That’s the other beauty of-
Elizabeth: I thought you would’ve … Because what I do, I mean I’m just an individual-
Gene: You’re just a humble individual business owner on the side.
Elizabeth: I export my data from QuickBooks.
Elizabeth: And into an Excel spreadsheet.
Gene: Please that’s oh my God, take me back to 1999.
Elizabeth: All right.
Gene: No. That’s not the way you do it. When you have a good cloud based system, these cloud based providers they make their money from accountants. They get leads and referrals from accountants.
Elizabeth: Oh okay.
Gene: You go to any accounting society or CPA event, they’re there sponsoring these events and they’re people speaking and what. So they want to be friendly to accountants.
Elizabeth: So your accountant probably has one login for Xero, one for QuickBooks, one FreshBooks?
Gene: You know it.
Elizabeth: And then you as a business would just give them access to your books?
Gene: That’s correct. And then the accountant from-
Elizabeth: So you’re not paying for their account?
Elizabeth: Their account is free.
Gene: They’ve got their own.
Gene: And then what they do is they … It depends on the service that you signup for but accountants can have their own access to it and then what they do is they access your system from wherever they are. Which is another beauty of a cloud based system.
Gene: You’re not exporting the spreadsheets and whatever. Which is why by the way, which is why you gotta beat up on your accountant a little bit. Depending on during the year if you’re using a cloud based application you say to your accountant, “Can you check out my books? I realize it’s only May. Can you look at my books now and tell me how I’m doing? And is there anything I should be thinking of or any tax planning we should be doing before the end of the year?” It’s not like I have to print stuff out or export. You can see it right now just login.
Gene: And we shouldn’t be doing that.
Elizabeth: You pay them for that right?
Gene: Yeah. You do.
Gene: Well you pay the accountant to do that.
Gene: But that’s a service that I think will hopefully pay back-
Elizabeth: Oh absolutely.
Gene: Through saved taxes and more profits.
Elizabeth: Now you prompt your accountant to do that. Does your accountant come to you and say, “Hey you want me to?”
Gene: You are really, we’re going down some treacherous roads right now Elizabeth because no.
Elizabeth: You know, a lot the people listening to this podcast are accountants.
Gene: Yes. Okay. Glad to hear.
Elizabeth: So let’s … And Gene’s an accountant so.
Gene: So let me just say this. If you are a CPA, I am a CPA. I love my accountant. There are many many great CPA’s out there. I think as a profession we do not do a good a job as we could be doing in providing great client service to our clients. I believe as a profession we should be leveraging these cloud based tools even more and being even more proactive with our clients because it’s easier to do that. And we can be billing for that.
Gene: Because our clients are desperate for us to, have get into their systems and give some recommendations and advice and things that they can be doing to make more money.
Elizabeth: The other thing with an accountant doing that is, and this might not be great for the small business owner but let’s say you’re working with this accountant and she’s in your system, and she’s got all your information. It’s really hard to leave her. It’s gonna be hard to fire her and go find another accountant.
Gene: Yes and no. No I don’t know about that. I think that-
Elizabeth: Well you’re very cold hearted though.
Gene: Yeah. I’m cold hearted. I have no problem firing my accountant if need be. And that’s a whole other topic. But it’s … No actually if you have an accountant that’s experienced with a few of these cloud based systems then that person should be able to pickup a new client that’s already using this system right away and-
Elizabeth: True true.
Gene: And in fact I will even argue with you that it’s, I’m seeing more and more accountants becoming versed with these different systems as opposed to back in the day they were only, they only knew QuickBooks.
Gene: Or certain types of systems. So again if you have a cloud based accounting system I think you should be leveraging your-
Gene: Accountant and asking your accountant to do more for you.
Elizabeth: Okay. We are gonna be right back after we hear from our sponsor with Gene’s word of brilliance. Stay tuned.
Elizabeth: Welcome back to the Small Biz Ahead Podcast. So the past two episodes or maybe it’s three now we’ve been talking about different, quirky PTO-
Gene: Paid time off.
Elizabeth: Paid time off benefits that some small business are giving to their employees because the name of the game is finding really qualified employees.
Elizabeth: And that’s very hard to do because a lot of times a small business owner is at a real disadvantage fighting against a larger company that can give people more time off. So Gene went and found all of these interesting new ways to give people paid time off perks.
WORD OF BRILLIANCE: Unlimited Vacation
Elizabeth: So what is today’s word of brilliance?
Gene: My word, well it’s two words. I’m sorry.
Elizabeth: Per usual.
Gene: It’s supposed to be a word of brilliance guys and it sometimes it’s just multiple words. And I apologize for that. But-
Elizabeth: That’s okay.
Gene: Okay. So today’s words of brilliance, unlimited vacation.
Elizabeth: I love the sound of that.
Gene: So everybody raise your hand if you’re providing your employees with unlimited vacation.
Elizabeth: You’re not doing that are you?
Gene: Anybody. No I’m definitely not doing that. And in fact whenever I speak to a group of business owners and I ask people to raise their hand if they’re doing that. No one ever raised their hand, in fact they look at me like I am like insane. Right?
Elizabeth: Okay. But I will tell you-
Gene: So what are your thoughts on unlimited vacation?
Elizabeth: So we actually wrote an article about this on Small Biz Ahead. We had someone dig into the data to see if you’re a small business owner and you’re providing people with unlimited vacation, how much vacation do they actually take?
Elizabeth: Can you guess how much they take?
Gene: Less than when they were having regular vacation. Right?
Elizabeth: Yes. They take two weeks.
Gene: Right right. It’s … I was actually doing a report on this for a separate place. And it turns out that a lot of these big companies LinkedIn does this. Some of the other big tech companies. They offer this unlimited vacation.
Gene: And as it turns out Elizabeth their employees are less happy with their vacation policy when it’s unlimited than when it’s not unlimited because it puts pressure on the employee. You work in some of these companies and it’s a very stress filled place. Very competitive place and you’ve got, think about it, you’ve got one person-
Elizabeth: I don’t get it. Like what-
Gene: You’ve got one person who’s doing like 60 hour weeks.
Gene: And then you got the guy sitting next to him who’s taking four months off a year for the sniffles or whatever. Right? Who’s gonna be here for the promotion at the end of the year? When it’s use it or lose it employees look at each other and they’re like, “You gonna use it? Are you gonna use it because, you know, you’ve got two weeks. I got two. We’re gonna use it or you lose it.” Easy. When it’s unlimited and the choice is left back up to the employee, people are stressing out about it. They don’t want to appear that they’re taking more vacation than somebody else. Or that they’re less committed to their job or committed to the company. So it’s making them unhappier. So let me say to you in the audience, if you are not offering unlimited vacation to your employees I understand why. It’s because you care for your employees. Hats off to you. Hats off to you.
Elizabeth: It’s a wonderful recruiting tool though. I mean I can tell you so many coworkers that I have here that would leave for a company that gave them unlimited vacation. So it sounds good. It’s a good-
Gene: I think that it’s … I just think that it is, there is a certain percentage of people that will take advantage of it. I think there is a much larger percentage of people-
Elizabeth: Who will take less.
Gene: Yeah. Who will find it, who will be at a disadvantage with it.
Gene: I really do. So unlimited vacation, it had sort of its day in the sun. A lot of people were talking about it for awhile.
Gene: It sort of become, people are more wary about it now because of the effects of it.
Elizabeth: Okay. So we’re gonna link to Gene’s article in the show notes. All about these PTO perks that small businesses are starting to offer now to compete with big businesses to recruit people.
Elizabeth: They’re real recruitment tools.
Elizabeth: And we’re also gonna link to our article called “Will an Unlimited Vacation Policy Work for Your Small Business? Here’s What the Research Says”. Because some types of small businesses may want to consider doing that.
Gene: Right. Fair enough.
Elizabeth: Tech startups for instance.
Gene: Fair enough.
Elizabeth: Because if Facebook is offering unlimited vacation and you’re offering a measly like 10 days you might want to-
Elizabeth: You might be having a hard time recruiting there. Thanks for listening everyone. We’ll be back in a couple days with our next episode of the Small Biz Ahead Podcast.
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