Excel for Business?
April 6, 2010 9:45 AM   Subscribe

Quickbooks vs. Excel? My business partner needs some convincing.

What are the advantages and disadvantages of using Excel as an accounting/bookkeeping tool?

Or should we use a real accounting software a la Quickbooks?
posted by pakoothefakoo to Work & Money (17 answers total) 1 user marked this as a favorite
Disadvantage to xl is it's not accepted by accountants, isn't auditable, data can become bad through accidental changes, etc.

Disadvantage of quickbooks is that it is clunky, hard to use and made by quicken.

Quickbooks is the tool you want.
posted by dfriedman at 9:49 AM on April 6, 2010

That depends on exactly what you want to do and how many transactions you want to process. But for anything other than the most basic of cash book type record I'd use a proper accounting tool.
posted by koahiatamadl at 10:11 AM on April 6, 2010

Quickbooks at least has some semblance of an audit trail. Excel is just one mis-sort away from being a disaster. I can second dfriedman's complaint about Quickbooks being clunky and made by Intuit (they also make Quicken, which is far worse) but it is easy to learn and if you read the support forums you'll see that even stupid people use it successfully.

If you have a bonafide business then Excel really isn't an option, nor is it going to be easier in anything but a very short time frame. There are other options out there besides Quickbooks but it is a decent default choice.
posted by ChrisHartley at 10:22 AM on April 6, 2010

Yes, sorry, Quickbooks and Quicken are made by Intuit. I always confuse this for some reason.
posted by dfriedman at 10:41 AM on April 6, 2010

If this is guaranteed to remain the most modest of business partnerships -- say, you're never going to be tempted to expand beyond selling a couple hundred dollars of vegetables at the farmer's market every summer -- then anything will do. (Actually, paper and pencil will be better than Excel because your ability to trace errors won't disappear when you hit Save.)

Let's assume you're more ambitious than that. If so, that Excel is even up for discussion indicates that half of the partnership doesn't know very much about accounting and finance -- which is in itself reason enough to insist on an accounting application like QuickBooks to enforce some semblance of orderly accounting.

If it's remotely possible that you'll grow, wish to attract investors or get a loan, have employees, pay taxes, have someone else prepare your taxes, survive a tax audit, hire out some of the bookkeeping, or even simply need to figure out why your books stopped balancing last month, you're going to want accounting software -- or a bookkeeper right from the start (who will, of course, use accounting software).

Accounting is way more than just knowing how much money you have (a mayonnaise jar will do for that). A huge part of it is about staying within accepted practices and being transparent to outsiders to whom you wish to or must show your financial data. Using something like QuickBooks does that for you.
posted by gum at 10:41 AM on April 6, 2010

Also consider freshbooks.
posted by atbash at 10:50 AM on April 6, 2010

Most reports in QuickBooks can be easily exported to Excel.

I'd recommend you first decide if this is a real business, or a hobby where you can make a little money.

Running it through someone's personal, checking account, no state tax id #, no Federal Identification Number, no non-owner employees: you might have a profitable hobby.

Reverse those conditions, and you have a real business which would benefit from QuickBooks.

I do not work for Intuit. I use QB and have my own complaints about the software, but it really works well for small businesses.
posted by Classic Diner at 10:51 AM on April 6, 2010

Disadvantage to xl is it's not accepted by accountants,

This is a big one. At tax time, a lot of small businesses just give their accountant their Quickbooks file and say "have fun!" Doesn't work as well when you are doing roll-your-own in Excel or using some new software.
posted by smackfu at 11:27 AM on April 6, 2010

Quickbooks is very simple to set up and use and is widely accepted, i.e. you will always be able to find a tax preparer or CPA that can accept your files. It is very portable in that a backup file containing all your company's data can be sent as an email attachment. And almost anything is easily exportable as a pdf or excel spreadsheet.

It's not perfect, but keeping the books day to day is as simple as keeping a checkbook register. The billing and invoicing features take a bit more prep, but there is enough customization that you can usually get it to do exactly what you want.
posted by readery at 11:46 AM on April 6, 2010

If this is an actual business, there is no question. I like Excel, and detest QuickBooks, but I use QB for accounting and not Excel because one of them is already set up for all the normal accounting things one will need to do.

Since neither you nor your partner appear to have any accounting expertise, I recommend hiring an accountant to set up your accounts etc before you start using it. It's an initial investment that will pay off yearly.
posted by jeather at 12:30 PM on April 6, 2010

Since neither you nor your partner appear to have any accounting expertise, I recommend hiring an accountant to set up your accounts etc before you start using it. It's an initial investment that will pay off yearly.

This is really good advice -- the accountant will know half a dozen important setup things to accomplish/avoid that won't be intuitive to you, and it's probably not more than an hour or two of work.
posted by gum at 12:36 PM on April 6, 2010 [1 favorite]

If you're paying the accountant by the hour, they will want the QB file because they know how to extract what they need. If you give them a spreadsheet, then they are going to be spending a lot more time playing with it, validating the data, etc.

You can also generate reports that are much easier to work with, rather than trying to manipulate what you have to figure out what's going on...

It's going to be much easier to just invest the $ and get QuickBooks or a similar accounting software package.
posted by Ding! at 4:20 PM on April 6, 2010

It sounds like you've got consensus already, but something you ought to consider and which might be a convincing argument to your associate is exactly how much money small business accountants make off of poor saps who thought they could do all their accounting in Excel. They can charge you a fortune if you come to them, desperately confused, a week before April 15th.

If you think that $(price of accountant * probability of this confused person being you next tax season) < $(price of QuickBooks), ie, you're pretty sure you can keep reasonable and comprehensible books in Excel, maybe you ought to take the chance. But you might want to call around to a couple of accountants and bookkeepers and see exactly what the going rate for an accountant to take all your Excel files and your shoebox full of receipts and convert them into sensible, reasonable tax forms, first.
posted by little light-giver at 9:20 PM on April 6, 2010

Probably depends on the volume of data you have to contend with. If you are talking retail with multiple transactions a day, Quickbooks (or something like it) is going to be preferable. But if you are talking a couple of dozen transactions a month, a spreadsheet or (gasp) a paper ledger might be better.

If you go with Excel, be sure and break it up into time-based pieces. For example, once you get the month closed up, print out a report to paper and save a separate file. That way if there is a data fubar, you can easily recreate the data. Or even save every change with a timestamped filename, so you can go back in time to audit mistakes. Might be "wasteful", but you are talking about a DVD full of data for the entire business's records, forever.
posted by gjc at 8:11 AM on April 7, 2010

Another thing I thought might be useful for you to know about Quickbooks -

The typical $120.00 version of Quickbooks Pro can be installed on up to 3 computers. The tricky thing is making sure you are working with the most updated version of the file with computers that are not networked. The best way I found with one client whose books I did was after using the file, save it as a back up and email it to the other file user(s). I did the books and payroll once a week, my client used it for estimates, invoicing and an occasional receipt on either his office desktop or laptop. We would make sure no one was using/updating the file at the same time and when work was completed just back it up and send as an email.
When starting any work on that company it was simple enough to find the most recent email and restoring from that.
posted by readery at 12:43 PM on April 7, 2010

My business accountant specifically told me not to use Excel, mainly because he wanted me using a package that provided an audit trail and that could generate useful reports. I went with GNUcash, a free option.
posted by hayvac at 2:33 PM on April 7, 2010

Thank you all for the useful answers!

I'm looking into QuickBooks alternatives, but seems like it's the most widely adapted software on the market.
posted by pakoothefakoo at 12:04 PM on April 8, 2010

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