As a business person, you can either choose to handle your bookkeeping manually, or you can go for the programmed computer software. Both bookkeeping methods, be it either by using computerized software or manually, have their own advantages and disadvantages.
Manual Bookkeeping: Ledgers and Journals
Manual journals and ledgers tend to be cheap, though they demand a lot of labor. The general ledger book is used to keep the ledger sheets, while the journal records the transaction details. The general ledger also keeps the monthly summaries from the general journal. It needs proper accounting and bookkeeping understanding to manage the manual ledger and journals. One slight error can affect the accounts in the final run.
One good thing about the manual bookkeeping systems is that they are less expensive. You can easily purchase two books; the ledger and the journal from your local bookstore.
The disadvantage of manual bookkeeping is that it is too time-consuming. You will spend a lot of time and effort trying to manage your accounts using the manual systems eventually. Every single transaction detail must be included in the books. Other than that, it needs proper skills and experience to handle them.
Computerized Bookkeeping: Accounting Software
With the advanced technology, you can find plenty of software that is developed to manage your accounts, such as Xero, QuickBooks, or MYOB. The only challenge here is that each software has been developed with specific features. Therefore, you should only choose one that can meet the needs of your business.
How to find a suitable computer accounting software?
• Consider the features. You should learn about what the software can do with regard to what you need.
• Consult related business owners. It is advised to talk to business owners in your niche for you to find a software that will work perfectly.
• Try out the demo version before buying.
• Consult a professional. Ideally, talk to an accountant to help you choose a software that will serve you right.
Basically, you need to understand how the program works, including the cost of acquiring and managing it. Some programs are available for a one-time fee, and you get free upgrades once in a while. Conversely, some will require you to pay for the usage after six or 12 months.
• Easy to use. You can manage your accounts with ease by clicking on a few buttons. The software automatically computes the information your input and give you the result.
• Time-saving. You don’t have to spend time filing in each record in your system.
• More professional than manual systems. The computerized systems are automatically managed, meaning that there will be limited errors involved. The layout is also professional and tidy enough. You will be notified if you make any error, making it more accurate.
• You can easily access a transaction by searching for it in a dedicated tab.
The major disadvantage of computerized accounting systems is that they can be costly as most require yearly subscription. However, by using a computerized bookkeeping software, you will be able to receive a more accurate and less time-consuming reports. Therefore, it is advisable to opt for a computerized system as although the manual systems are less costly but they entail more paperwork.