Financially Adjusted
The Financially Adjusted podcast is for all the current and aspiring small business entrepreneurs out there. I'm Leslie Roth - a virtual bookkeeping business owner- and I'm excited to share my knowledge and expertise with you when it comes to handling the money in your business and life. We'll get into all kinds of money topics: financial systems, budgeting, bookkeeping, setting and working toward financial goals, and the overall management of your finances. My goal is to leave you feeling enlightened, inspired, empowered, and confident as an entrepreneur. Settle in and hit follow! You are not on this journey alone!
For more entrepreneurial financial help, go to www.financiallyadjusted.com.
Financially Adjusted
#38: ACCOUNTING SOFTWARE VS. A SPREADSHEET
Are you questioning whether you should manage the bookkeeping in your chiropractic business with spreadsheets or accounting software? In this episode, we explore whether spreadsheets or accounting software is the best tool for your bookkeeping. I break down the pros and cons of both options and give my personal recommendation. If you’re ready for some clear guidance when it comes to making this decision, tune in now and make an informed choice for your practice!
Resources Mentioned:
Helpful Resources:
Email me with any questions you’d like answered in future Q&A episodes!
Recommended payroll software (affiliate links):
ADP
GUSTO
Recommended bank and the one I use in my business (affiliate link):
RELAY BANK
QuickBooks Online is my go-to accounting software. Get an amazing discount (30% off for 6 months) when you buy with my affiliate link below.
SIGN UP FOR QUICKBOOKS ONLINE
My favorite budgeting app w/ an amazing free version:
EVERY DOLLAR BUDGETING APP
My preferred business credit card with cash rewards (affiliate link):
If you have healthy behaviors around spending with a credit card, this is a great one to use and earn cash back. It also links up well with QuickBooks Online. If you have unhealthy spending habits with credit cards, please avoid using one! You need to be able to pay it off monthly and not carry a balance. I use this one for my business and it makes paying bills simple.
CAPITAL ONE BUSINESS CREDIT CARD
Check out all my FREE financial resources in one place
Follow me on social media:
Facebook
Instagram
LinkedIn
Pinterest
Disclaimer: This content is for educational and informational purposes only. Please consult with an accounting professional for direct advice based on your specific business situation.
Hey there my chiropractic friends! I hope that you're doing well, and life and business are flowing smoothly for you. Sometimes as a business owner we have these seasons where everything flows well and your inner groove with all your systems. And managing your business but more often than not it feels like we're on this roller coaster ride of juggling a million balls in the air trying to run our business while still trying to have some type of family and social life. You are definitely not alone I think every business owner struggles with this especially…chiropractors that I know because you are with patients so much that it it becomes a little bit harder to manage the other aspects of your business because you're not sitting in front of a computer all the time and…Sometimes you're just a one person show.…
Most likely if you're running a chiropractic clinic you've spent a ton of time learning and practicing your skills when it comes to adjusting your patients, but you haven't spent a ton of time learning about business and how to manage your business finances…which completely makes sense You didn't go to business school you went to school for chiropractic. That's why I create the content that I do. My goal is to help you with start-from-scratch easy to consume content that gives you the knowledge and insights you need to run the financial side of your practice well. That being said I'll get into today's topic which is whether or not you should use accounting software or a spreadsheet for bookkeeping in your business. If you tuned into the last episode, you learned about the pros and cons of DIY bookkeeping and outsourced bookkeeping.
So hopefully at this point you have an idea of how you want to handle your book keeping or you validated that you're already handling it the right way for you which is also incredibly valuable. Our topic today ties into that decision and can help you get clearer on the tools you want to use for your bookkeeping. Spoiler alert I almost…
always recommend cloud-based accounting software for managing your bookkeeping. However, there are some instances where it might work just fine for you to use a spreadsheet. And that completely depends on your situation. But I do get this question a lot - should I just use software and save the money (I'm sorry spreadsheet) and just save money or should I go ahead and purchase the accounting software and use that. So that's why I created this episode, and I'll get right into it.
First of all, I am going to stress that you must have a bookkeeping system. I am a total broken record with this but That is my jam I have a bookkeeping business, and I see firsthand just how important it is to have not just a bookkeeping system but an accurate and up to date bookkeeping system. No matter how big or small your business is it's an absolute necessity. I mentioned the importance of bookkeeping in my last two episodes, and I mention it all the time but I can't stress it enough. It's vital that you have your income being tracked your expenses tracked and your profits tracked So that you can remain compliant.
One…
But also, two to maximize deductions…and just have a clear financial picture of your business. Numbers do not lie, and they will tell you the story of your business. If you don't track them and pay attention to them, you’re just running your business blind. Okay first, we're going to look at spreadsheets today and I will tell you that you know my cons list is going to be way longer than my pros list here. So here it goes pros…really, I consider…There are only to be two pros when it comes to using a spreadsheet.
One is that it's low cost or no cost and the other…is that it can be straightforward…more so than learning a software system So the first pro, low cost or no cost. If you're using a spreadsheet like Google sheets, this is completely free. You can go and you can sign up for a Gmail account and you can get, um your Google spreadsheets, Google documents all of the Google products you can get them for free. And if you use Microsoft products which I do prefer, you’re going to pay a little bit of money So I think for my subscription for Microsoft Office, I pay maybe about a hundred and six dollars annually. And it'll be a little bit more if you pay monthly. But it's still pretty low cost in my opinion.
And I do tend to like Excel a whole lot better than Google sheets. But Google Sheets has features that will make it easy for you in your business and will give you the pro side of having a spreadsheet that you're using So It's free number one so low cost. But also they have, um the ability that you can actually share a spreadsheet…with someone and you can both edit you know if you set somebody up as an editor when you share the spreadsheet with them they can go in and edit But either way even if they're just a viewer of your spreadsheet sheet, you can see real time changes with Google sheets. Where um if something happens you change something, automatically saves and it automatically shows those changes to anybody who has access to it With Excel, I believe you can turn on like the cloud-based saving feature but…
you're not going to like if you share it with somebody they're not going to see the updated version of that copy until you send them the updated version of that copy But I prefer Excel…because it has like a more robust…
feature when it comes to formulas and I think it's just more user friendly, but I've been used to using excel for years. So if you're a total newbie when it comes to spreadsheets, you might want to stick with Google sheets. Completely up to you. You can find a million tutorials out there for both and then you can kind of gauge before you jump into either one of them Which one you think would be easier to use. That second pro I mentioned is that spreadsheets tend to be a little bit more straightforward. Maybe a little less of a learning curve but that depends. you might…
think otherwise when you start using software that you know that's a little bit easier to use versus a spreadsheet. But there is a lot of material out there like education material for you to plug into when it comes to using a spreadsheet. But it's going to be pretty basic And you can also go out and buy templates that people sell for a P and L and a balance sheet And then you can simply plug in your own numbers But most times I will warn you these aren't going to be specific to your industry Maybe you can find one specific to your industry but for chiropractors, There's probably not going to be a whole lot out there in the way of templates you can purchase that will be very specific. One thing you can do though if you're Using a spreadsheet, you can grab my free sample chiropractic P and L and you can just alter it to be the same categories and kind of use that as a guide. Now, I'm going to get into the cons next and that's a little bit of a longer list but I really…Don't recommend doing spreadsheets if you are a chiropractor even if you have a smaller chiropractic business.
I'll get into why a little bit more. down the road in the episode but, if you are using a spreadsheet those would be the two pros that I would…
say exists for using a spreadsheet So not many. Cons. One is that if you haven't used spreadsheets before…It is going to be a steeper learning curve like I mentioned before. It may feel very foreign to you. And it may end up feeling a little bit harder than if you just got set up in accounting software.
So, like I said, you can find tutorials online you can figure out what type of spreadsheet might be easier for you to use and you can also purchase a template that's already done for you So that takes a lot of the legwork out of that. But if you haven't used spreadsheet for much before especially for deeper level like formulas and things like that. Then there's going to be that steeper learning curve. But if you're already familiar, then it could really be a pros thing and it could be a little bit less of a headache for you to use this. It also isn't scalable that's the second con It's not scalable at all,the more complex your business gets the more difficult it is to scale using a spreadsheet and keep tracking things in the same manner.
It's more difficult to manage and to categorize expenses when the volume of your transactions increases. It can be a lot harder to get everything entered into the spreadsheet and…
It can just get complex very quickly…
A third con is that there are minimal options for reporting. Like it's going to be pretty basic, You're going to have probably your profit and loss statement and your balance sheet you go out and get a template, you can definitely get one for those two and you might be able to find a cash flow template as well, and…they're not quite created equal It just depends on who you purchase it from. You may be able to find one that's a little bit more elaborate and set up nicely. I do not offer a spreadsheet for P and L, but I do know there's some great financial people out there that do like Jamie Trull would be one um I know she offers…um probably a great one because all of her stuff is is really done well and very professionally so that would be an option if you're looking for a template. But there are minimal options more so for reporting if you have accounting software t's going to have more of a robust reporting system.
It's going to be more difficult with a spreadsheet to compare periods like You want to compare year to year or month to month. Unless you create specific start from scratch spreadsheet to compare certain periods and you can copy being paste a lot, and that is definitely an option. Sometimes formulas get a little bit tricky when you do copy and pasting but that is an option but typically if you want to compare periods, you have to create a whole separate spreadsheet. From scratch to do that whereas in accounting software it's just like you literally just plug in a couple of filters and hit run and it does it for you. So that's going to be a pretty big con because as you move forward, and you want to look at you know historical data and compare…Period to period then it's going to be a little bit harder And that con becomes even bigger…
So, another con I have probably about four or five more cons here for spreadsheets so brace yourself.
Spreadsheets are less professional. So, if you're going to get a loan selling your business or you're working with other professionals…
The spreadsheets are going to be really difficult. To pass along to others, to view and it's going to look less professional…
It's going to appear a little bit more messy and difficult called to understand…versus if you're presenting financials from an accounting software program. It's also going to be more difficult to share with others. Like Google spreadsheets definitely makes it easier to share and see changes in real time but that's going to be a little bit more difficult. And…You know if you're giving that over to a bank that you're trying to get a loan from, it's definitely going to be harder for them to view that…
And you're not going to be on the same page either if you're working with a bookkeeper or a tax professional, There's going to be a lack of sharing capability…there's just going to be um out more clunky…Flow to things when you have your information in a spreadsheet. There's also a higher chance of mistakes happening…due to broken and incorrect formulas and formatting issues. So, you may really get caught up in a mess when it comes to…
adding information and then trying to keep your formulas consistent with the information that you're adding So…When you're more comfortable with spreadsheets, this is less of a con but if you're totally new to spreadsheets and formulas this can become pretty messy pretty quickly. It's also more time consuming much more time consuming than if you're using software, there's going to be less automation capabilities, you might be able to set up transfers of data from one cell in a spreadsheet to another. But that's about the extent of it and if you're not familiar with doing this, that can also lead to the broken formulas that I talked about. It can get really messy really quickly and then if you can't figure out how to fix formula then you have to just have to manually enter everything which is pretty darn time consuming. So entering in all of your transaction is going to be time consuming…
And there just isn't anything like automated within the system them so you're going to be spending probably at least four times the amount entering in your information to a spreadsheet, and then the more increased volume you have on your business down the road and the more complex…the more time consuming it's going to be.
Alright, another con is that it's just more stressful and difficult called in case of an audit. If you would happen to get audited which I hope that doesn't happened to you but the reality is it could and you have to be prepared for that. That's already going to be a stressful situation that you're in. But having your bookkeeping be in a spreadsheet is going to make it much more stressful and much more tedious. The IRS is doing a deep dive essentially into your books into all of your transactions.
And with a spreadsheet, they’ll be able to see less data than if they were in your bookkeeping software or things, you know are tied to the transactions coming in from your bank feed. You might have receipts set up in a software system whereas you probably not going to be doing that in a spreadsheet So You're just going to have to provide a lot more information It's going to take more time and be more tedious and you're going to have to answer more questions. If you have spreadsheets…
And another con is that if you choose to switch to a software system down the road, you're not going to have all of your historic good data in that software system unless you go through and you log everything from prior years So you would have to do um you know what we call in the bookkeeping world a catch up or a cleanup And you would have to pretty much Enter everything into your software if you wanted to have all of your years of data in there. You could switch to the software system and just start clean and not have it in there but…it's ideal to really have all of your historical data from your business in the same system…
So that was my long list of cons for a spreadsheet. I'm going to get into software next, and I'll start with pros. And so if you have a cloud based software system which is what I highly recommend You will have your data available and saved in real time as long as there's an Internet connection. This can be so handy. And let's be honest like oftentimes you're going to have an internet connection. Every once in a while you might lose your connection, you might not be able to access it but for the most part it's going to be so accessible.
Your stuff is saved automatically and you don't have to worry about like having your most up to date copy like if you had QuickBooks desktop for instance that where you didn't have that feature of cloud based I mean I think you can pay for it for maybe fifty bucks a month but it's going to be up to date so if you're Sharing with an accounting professional if you have your bookkeeper and your tax professional and you want them to see your books or be the ones that are keeping your books up Cloud based is the way to go You can easily share with your accounting professionals because you can simply add them as an accountant user.
They can then see your books from their dashboard and their login so you don't have to give them your password or anything like that You just add them as a user. And I use QuickBooks online and use that exclusively for my bookkeeping business plus I recommend that. There are other good ones out there. I just haven't familiarized myself with a lot of them because I think it's more efficient just to use one system and I have found QuickBooks online to be the most efficient and user friendly for me personally. So, I highly recommend that one But I know every software system out there basically it will give you the to add your accounting professional. And they have that feature where the accountant has their accountant user login and then they can see your books So…Most software systems also are they're going to have really good education and to tutorials on how to use their system.
It's probably going to be a little bit harder for you to find. Tutorials out there on how to use a spreadsheet specifically for how your you're doing your books; you can find more general…spreadsheet guidance on like how formulas work how to create tables and charts and all of that type of stuff like the functionality it's going to be probably less specific for using it for the purposes that you're using it for with accounting software. For instance, QuickBooks online they have like a whole educational system you can find tons of um YouTube video tutorials that QuickBooks actually has on their channel and there's so many different financial professionals out there that have information on how to use it.…
And down the road I'll actually be doing a lot more, um DIY tutorial videos on my YouTube channel Haven't gotten there yet but, um, that will be an option down the road that I will offer for education but there's so many different professionals. Out there that do offer that, so I recommend plugging into tutorials on whatever software system you're using..
Another pro when it comes to accounting software is that the data is more detailed and more organized. So, you're going to have all of your data coming in… your transactions… you’re tracking your expenses your revenue and it's all going to be detailed within your system. Whereas in a spreadsheet, you can put details into a spreadsheet and have a separate one that you list out every single transaction in the date, the time what it was for that type of thing but It's just easier to do when you have a software system.
You'll have a details or a memo field that you can write specifics like let's say that you had a meal a business meal. You can write what the business purpose was. And just take more notes in there.
And the reporting system like I mentioned before is a lot more robust, you're going to be able to run all types of different reports and compare a lot of different periods.…You can also customize reports in accounting software.
Another pro is that you can track expenses much easier and you can record your expenses in the way that you list the vendor and you list the details like I mentioned before but then when you're tracking expenses or let say you want to look up all the expenses for one particular vendor? If you've categorized all your transactions with a vendor name, you can look up that vendor name under expenses and you can see everything…that you paid to one vendor and run a report just seeing that.
So, it's very helpful and a lot more detailed when it comes to tracking expenses. It's also much more professional if you have accurate up to date information in your bookkeeping system. This is going to bode well for you when you're trying to get a loan or if you're asking someone to invest in your business or if you want to sell your business down the road, they're going to want to deep dive into your books And…Just like with a with an audit it's going to be very hard for them to do that with your spreadsheet system because You're not going to have all of the details in there like you would with your accounting software. So, it's going to look just so much more polished when you run reports so much more professional.
They're going to see that you've been doing your books in a detailed bookkeeping accounting software and it's just going to Make you look more professional and show them that you're running your business more seriously and more accurately.
Also, outsourced accounting professionals that use will have an easier time working with you. Because they can jump in and just access your books with their login from their accounting dashboard, They can manage your books so much better. Like my clients in my bookkeeping business they simply add me as an accountant user. And then I see them on my client list, and I can just pull their books up right from there and manage their books. There isn’t this clunky system I'm trying to use and then update and then share back with them. It’s just so much easier to use.
Alright, yet another pro for using an accounting software system is typically they will have an app for your phone. QuickBooks online does and many of the other accounting sufferers do as well. But they have an app for your phone that you can use to track mileage and then you can also snap paper receipts. It's very handy So let's say you're out and you have a paper receipt from a meal you can even write on your receipt what the business purpose was. And then you can snap a picture of that receipt and upload it right to your system from there.
Another thing you can do is set up your mileage tracking. You can set this up on auto track so that it just you know tracks everywhere you go automatically. If you Do personal and business travel, I don't recommend that because then you're going to have to like really weed through all your trips and designate what's business what's not. I recommend just using the feature whenever you need it So you can plug in details of your car, details of the point a to point b address, it'll calculate the mileage for you automatically so you have every detail you could possibly need date time address, mileage right in there and it's super easy to use So I highly recommend using those apps if you have an accounting software system. Another pro is that it’s time saving and it's efficient.
You can link your bank accounts credit cards, Amazon app and all types of other apps to automatically bring in transactions for you. So, everything that flows through your bank account or your credit card is flowing into the QuickBooks online or whatever system you're using. You can then set up rules for any common transaction so let's say that you set up a rule for all those recurring transaction you have in your business. You set up the rule so that automatically it will add the vendor…add the category the expense category, and you can set it up so that it auto adds and it just funnels right into your books or you can set it up that you can review it right in your bank feed. And easily just hit add if it's correct. And then if you set it up to auto add, then it's done for you.
You go into your bookkeeping system, weekly or at the end of the month, And all you do is run your report and then you review everything but it's incredibly time saving and efficient, having this feature.
I have one more pro to go over when it comes to an accounting software system, and that is that it acts as a storage system. So, most accounting software has this feature but I'll speak to QuickBooks online all the time when I'm talking about accounting software because that's what I use and that's what I recommend. But it usually is true for all the others So if you use something else no biggie it still applies. You can save receipts and documents within your software system, and you can link certain receipts to that expense So if you let's say you snap the receipt with the app like I mentioned earlier, that'll come into your system You can categorize it right there on the app or you can just review that when you're using it on your desktop. And you can link that up with the expense.
So that's super handy and then you can just simply upload receipts if you want to link them to a certain expense, you can do this with your with your bank statements as well. So let's say you do your monthly reconciliation or your bookkeeper does, You can save the bank statement right in that reconciliation so that it's linked which is incredibly handy so then if your tax professional wants to see your end of your statement they're already in your bookkeeping system, everything's right there for them They don't have to ask you for any of that stuff. And if you would happen to get audited, That's huge That's an incredible time saver. It's showing them that you're professionally…
managing your business and your bookkeeping and they're going to have less questions for you and they're going to have everything they need right there…
So that's incredibly handy. And a huge pro in my opinion. Another thing you can save that I just thought of is your W9s. So, if you have a vendor that you typically would send a 1099 to, you can save their W9 right in with their other information. So that is just a great feature. And it helps a great deal when it comes to managing your business and having outside professionals see that.
And I do have a few cons when it comes to the accounting software because I am realistic and I know there's pros and cons to everything, even though my pros list is much longer. We'll touch on the on the cons as well. So, the obvious one is cost. There's a cost to having accounting software and you're going to feel that a lot more when you're just starting out in your business It's definitely going to hit your bottom line a little harder It's going to be a little bit a little more ouchy I guess when it comes to fitting that into your budget in the beginning stages of business.
But as a chiropractor you don't need some crazy elaborate software system like you can do the lower tier. Of subscription whenever you're purchasing it So for QuickBooks online that's what I know. I recommend QuickBooks simple start which is their lower tier subscriptions like their tier one subscription.
And most chiropractors I know do perfectly fine with that They don't really need anything else and that's thirty dollars a month which isn't going to break the bank. That's not that bad and you can actually buy this subscription annually and save money. I also have a discount link in my show notes so definitely check that out It is an affiliate links so full disclosure I get a couple bucks for that maybe but it's such a win-win situation because you get a decent discount and I get a couple bucks to keep the lights on.
So, QuickBooks simple start would be a fine place for you to start as a chiropractor, the only reason you would need a tier up which would be QuickBooks Essentials and I believe that's sixty dollars a month roughly…would be if you have payroll through QuickBooks online as well. And then I think they make you get that higher level subscription. And so really you can get away with a lower tier subscription. People that need the more advanced subscriptions, which would be QuickBooks Plus QuickBooks Advanced, are ones that are using a lot of different features like job costing and that's more construction business. And then also using class tracking and that's typically for if you need to separate out different locations and different parts of the business that you want separate P and Ls or you want to track separate locations - usually, real estate businesses are doing that - or separate jobs.
So, as a chiropractor you likely don't need that. Maybe if you have multiple locations you do, but most chiropractors I know, they're running a straightforward clinic. They just need the lower-level functioning software so QuickBooks online simple start would be perfect Thirty bucks a month. That's not going to break the bank but I do recognize that when you're starting out in business, you have a lot of costs and you don't necessarily have higher revenue yet.
But in my opinion, this cost is minimal for what it actually does for you in your business and the level of organization and efficiency it brings to your financial data.
Another con that can exist with accounting software is that there's a learning curve. If you DIY your bookkeeping this becomes a much bigger issue because you have to dive in even further and understand the system. Understand what you're doing and making sure that you're tracking things properly. This could all take a little more time to learn because there are more features and more options with an accounting software than there is with a spreadsheet. But if you outsource, you still have to learn the system, just on a different level. You likely more so want to learn how to track expenses, look up you know expenses by vendor and different reports and understand how to run your P and L you know compare different periods.
You should still know how to navigate it, but you don't have to deep dive like if you're DIYing you're bookkeeping.
And then the last con that I'll talk about when it comes to accounting software, is internet issues. Obviously if you're using a cloud-based software that operates when the internet's working, it's going to be a negative when it's not working. But let's be honest, that does not happen very often and if there's the one time that it happens it's probably going to be a couple times a year maybe. But most times you won't have any issues accessing it.
So that pretty much wraps up my pros and cons list for each one of these and, as you can tell, I am definitely a huge advocate for online accounting software versus a spreadsheet. However, I do recognize that sometimes a spreadsheet can be just fine for certain businesses. There are businesses that are so small and have such a minimal amount of transactions that it can really work fine just to use a spreadsheet.
But as far as I'm concerned this is not any chiropractic business. Even if you're a rather tiny practice, you still have high enough volume and high enough transactions are high enough volume of transactions each month that you absolutely need to be using an accounting software over a spreadsheet. And even if you're small to start out in your chiropractic business there's a very good chance that you're going to grow quickly, and the volume and complexity of your business is going to increase rapidly.
Now, I have seen many chiropractors who also own real estate. Maybe just you own the business or the building that you're operating your business out of or maybe you have you know a real estate business where you have more properties. So, if that's you I think in this case it's fine to have your bookkeeping exist within a spreadsheet if you're running a real estate business also that just very small just a handful of transactions coming through.
Maybe you have rental income, you have insurance expenses, bank fees, supplies, repairs, some utilities, but that’s the extent of it. If this is the case for you, then accounting software might be overkill. But I would still recommend it if you want to compare years to years and…have this system…monthly for you to be automated So if you're DIYing your bookkeeping, then I think it's more important to have accounting software no matter what because you are able to track things and automate things a lot easier you just have to weigh that you know thirty dollar a month cost. How does that fall in your budget? Most times that's not going to break the bank.
So, you do have to decide that for you and your specific situation. It will always keep you more organized to have accounting software than a spreadsheet will.
And that's my two cents on this topic.
Don't get me wrong, I love spreadsheets. I use them for everything but when it comes to bookkeeping, I think there needs to be a more elaborate tracking and reporting system unless you're someone who literally just has handful transactions and that's not going to really change down the road.
So, I’m curious…Are you someone who operates with a spreadsheet in your business? And have you considered using software? Let me know. You can send me a message with the hyperlink in the show notes or DM me on Facebook. However you want to get in touch with me. I'm always curious about what you have going on in your business world and what your questions are from me so don't hesitate to reach out.
Until next week, remember that action clarity and imperfect action is better than none at all.
