Checklist: Choosing the Right Bookkeeping Option

If you are like most small businesses, your choice for a bookkeeping system will come down to three: manual, off-the-shelf software, and online. Each has their advantages and disadvantages.

Manual System

Advantages:
Easy, cheap, and fast to implement.
Good for very small businesses that don't have large inventories or generate
numerous invoices.

Disadvantages:
Can't handle complex transactions or large volumes of invoices.
Because it's paper-based, files are more easily lost or misplaced.
Can't generate sophisticated reports that offer real insight into operating a small business.

Off-the-Shelf Software Packages

Advantages:
Automates detailed and labor-intensive tasks such as invoicing and billing.
Generates accurate and powerful reports.

Disadvantages:
Learning curve can be steep.
Generally requires a consultant to set up.
Requires annual software upgrades.

Online Software

Advantages:
Can access your bookkeeping and accounting tasks from any computer
with an Internet connection.
No need to install software or upgrade it each time the vendor releases a new version.

Disadvantages:
Hosted applications may be slower than off-the-shelf software.
Online applications aren't as feature-rich or as user-friendly as higher-end desktop software.