Whether you are a small business owner needing small business accounting or the CEO of a mid-sized company, you understand the importance of maintaining organized financial records, such as balance sheets, budgets, and financial reports. With digital records like QuickBooks – a top bookkeeping and accounting software – the storage, management, and analysis of business administration has become easier than ever. In fact, research shows that over 64% of all medium and small business owners depend upon accounting software.
While QuickBooks has certainly transformed bookkeeping procedures, is the software really advanced enough to eliminate the need for an accounting professional? In this article, we will explore the features, benefits and limitations associated with an accounting solution like QuickBooks, and ultimately answer the question, ‘can QuickBooks replace an accountant?’
Things That QuickBooks Can Do
First, you should understand that QuickBooks is primarily a bookkeeping software – which makes it different from accounting software designed for the professional needs of accountants.
This means that QuickBooks can be used for invoice processing, sales and expense management, employee time tracking, and for producing reports that are useful for tax and budget purposes such as financial statements which provide succinct information for your tax preparer or accountant.
Let us explore what QuickBooks brings to the business table, in greater detail:
- Coherent financial system:
QuickBooks is easily integrated with numerous third-party services. This capability means it can be of considerable help in financial management.
Here are several QuickBooks integration examples of applications you can add related to different aspects of business:
- Receipt Bank
Invoicing and billing applications:
- Spotlight Reporting
- SOS Inventory
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Accuracy and reliability:
One of QuickBooks’ main purposes is to ensure accuracy and minimal errors. To achieve this accuracy objective, your QuickBooks accounting tool comes with invoice reminders, report frameworks capable of filling in data automatically, chart of accounts (a list containing a business’ balances and accounts) and invoicing support.
Moreover, QuickBooks also offers a broad range of reports, including:
- Account lists
- Balance sheets
- Comparative balance sheets
- General ledger
- Profit and loss
- Profit and loss comparison
- Recent transactions
- Recurrent template list
- Reconciliation reports
- List of transactions classified by date and trial balance
The user-friendliness associated with QuickBooks makes it easy to operate even for someone without advanced financial knowledge. Many people entirely new to the program will find this software intuitive and easily navigable.
Upon logging in, a user will observe a dashboard containing the most crucial data like expenses, profit and loss, invoice, sales, bank accounts and tips. On the left side of the screen, users will be able to see a menu that allows access to pages such as sales, banking, expenses, reports, employees, accounting apps, taxes, dashboards and tools.
Another reason for QuickBooks’ popularity is that it can easily be used through a phone or a tablet device. The device can be used for expense recording, entering transactions, sending reports and invoicing clients. All the data is automatically synchronized across every one of your devices and this data is also backed up to the cloud.
Although you can benefit from important accounting insights through QuickBooks’ profit-and-loss statements, balance sheets and cash flow statements, this information is restricted to raw data. This is where the difference between accounting and bookkeeping becomes prominent: while bookkeeping helps you keep financial data organized, accounting walks the extra mile and delivers practical recommendations on the basis of historical data, financial principles, and missed opportunities. All of this is not possible without the services of an accountant, which brings us to:
Things That QuickBooks Cannot Do
Accountants, CPAs and payroll managers around the world use QuickBooks, thanks to its versatility and robustness. However, like almost any software, it is only as good as the person behind its steering wheel. Despite its comprehensiveness, there are several essential tasks that QuickBooks cannot perform:
There are multiple aspects of compliance that accountants pay attention to, some of which are tax filings, tax rules pertinent to amortization and depreciation and filings related to payroll. While QuickBooks can be used to obtain essential information, it cannot by itself execute these functions. For instance, you cannot rely on QuickBooks to identify errors or let you know if the filings are accurate and complete.
With QuickBooks, you can quickly book the double-entry – in other words, credit and debit. For instance, upon writing a check for the utility bill, you enter utilities expense. QuickBooks will execute the entry involving the checking account as well as the utilities expenditure account. However, if you choose an incorrect account, QuickBooks will fail to spot the error. While the debit and credit will be equated, the software will be unable to rectify the account.
This is just one of many examples where making an entry is not simple and requires further details. In such instances, you can benefit from the presence of an actual accountant.
Accountants have the training that enables them to spot what needs to be spotted and help out business owners – not just in day-to-day routine practices like ensuring balance sheet updating – but also in observing trends and spotting useful patterns.
By asking the right questions, accountants also play an important role in steering the organization and helping out the management. For instance, accountants can help you spot divisions that have reached their potential and should not receive further investments and figure out the business areas that deserve more investment, be it in the form of money, time, or efforts.
To conclude, while QuickBooks offers a lot of benefits, especially for small businesses, it has its limitations and can certainly not replace the value offered by professional accountants. This is not an either/or scenario and the best approach for a business would be to use a bookkeeping software like QuickBooks along with the services of an accountant, and benefit from the best of both worlds.
If you’re new to QuickBooks and are unsure of which version is right for you, our QuickBooks ProAdvisors can help. We also offer QuickBooks training. When you fully understand QuickBooks capacity, which version is right for you, when a new version is needed, or how to leverage the software’s full functionality, you’ll truly unlock the key to your financial success.
RELATED: How Your Accountant and Bookkeeper Can Unleash the Full Power of QuickBooks for Your Business
One way to tap into everything the accounting software has to offer is to hire QuickBooks ProAdvisors. QB ProAdvisors can help train your in-house resources, i.e., your bookkeeper(s) and accountant(s), and help them understand and utilize the full power of QuickBooks, which can be transformative for your business.
Bernard Roesch, MISSION Accounting’s founder, is a Harvard MBA and a QuickBooks ProAdvisor. His expertise extends beyond implementing an accounting system for a growing business. He also has over 25 years, advising his clients on how to make profitable and smart business decisions based on the detailed information and reports generated by business accounting software like QuickBooks. His team of QuickBooks experts can also help set you up for success with your accounting needs by helping you choose the right QuickBooks version, including QuickBooks Pro, QuickBooks Online, or QuickBooks Premier offering multiple industry-specific versions.
When you purchase your QuickBooks software from MISSION, we can help you professionally install it, and advise on the most essential apps you will need to stay organized and get the most out of the software. Once it is installed, we can train you and your staff how to use it, as well as provide insights for best practices when working with a skilled accountant.
Contact us today by calling 203-227-9475 for a complimentary initial consultation and discussion about your QuickBooks software needs.