Choose your accounting system

There are many paths to choosing an accounting system to use. Here we assume you want to evaluate the most popular and find out what one offers against another. This CANNOT offer comprehensive information about what is available - even just from the more popular suppliers.

We are Reckon Professional Partners and Xero Certified Advisors. We are also in MYOB's connected accounting program and have access to Cognito (we run Windows versions even though client's run Mac versions).

Where do you start? The first choice to make is desktop or cloud. Despite the hype, desktop has not yet been replaced by cloud systems, although they are preferred by vendors. We list some features generally claimed for or against each type. Remember there is no such thing as a perfect system.

Desktop

Cloud

Pros

Full control

Features

Product "ownership"

Data ownership

Security

Speed

Backups

Nightly bank feeds

Accountant / client access

Multi-access

Cons

"Proper" backups

Off-site backups

Local security

Updates

Internet availability

Security

Access to backups

Continued access to data

Cost

The main criteria has to be how it works for you. Two programs may say they cover the same features - but how that fits with your business can be vastly different. Make sure the package you are considering does what you need.

Not only are features different, but other factors not related to keeping this year's books come into play. For example, family trusts generally have a life of 80 years. What's more, they may not have any transactions for most of those.

Costs are also important. If you have one user and one system that's relatively straight-forward - although it can be difficult to compare because you might choose to defer upgrades beyond the three years we recommend (unless you use payroll which needs to be updated annually).

Desktop
Cloud

Desktop

There are three popular desktop accounting systems. We're not including cashbooks or less popular systems. Basically, you have three main options - MoneyWorks, MYOB and Reckon.

Moneyworks has a cash-book, two main levels of product (Express and Gold) - and a more major multi-user version. Designed for the Mac, the PC version is the same from an accounting perspective.

MYOB AccountRight series also comes in various levels - Basic, Standard, Plus, Premier and Enterprise. The AccountEdge (Mac) series has three main levels - Basic, Pro and Network.

Reckon (formerly QuickBooks) has several versions - Easystart, Accounting, Plus, Premier and Enterprise. Note the Accounting product is now only available on subscription.

First, eliminate those which don't run on your platform. Then choose between the competing products without worrying about the levels.

Having chosen a product, narrow down the level that you want. Basically the more you pay the more features you get. Some include payroll, and some don't.

A word on levels - you can always go up another level (unless you're already at the top) but you can't go back down. While it sounds like a marketing ploy, there's also the problem of extra features having extra fields. There's no easy way to accommodate the loss of these fields.

Cloud

There are three popular cloud accounting systems - MYOB, Reckon and Xero.

MYOB AccountRight series comes in various levels - Basic, Standard, Plus and Premier. But MYOB also offers another product - Essentials. Unlike Accountright, this does not have a desktop version. It's only in the cloud. This offers fewer features - but still does the basics.

Reckon (formerly QuickBooks), has only the Enterprise version in the cloud. This means if you want to return to the desktop, lower desktop versions won't work. Reckon also offers a new cloud-only product - ReckonOne. This comes with optional features. The core module is cheap - but you'll probably want at least the bank feeds extra. Features can be added or dropped from month to month as needed (e.g. a club may only require debtors once a year to issue invoices for subscriptions). Even with all modules it still costs roughly half of Xero's fees.

Xero is the system that pioneered the cloud accounting market. It only has two versions (actually three but the limits on the first are pretty tight). The key differences are FX and payroll. If FX is a major issue for you the pricing of Xero is nothing compared with the way it handles this. Pricing of payroll is not cheap - but if you use Xero for accounting, it could make sense for you to use. However, others may be cheaper for you and still interface with Xero.

The other big thing setting Xero apart is third party software (like payroll just mentioned). Many extras are available - too many to even start to cover. But if Xero doesn't do what you want, extras add to the functionality but also to the cost. A common example is inventory (beyond the simple features included). Programs that come from a desktop background (MYOB AccountRight and Reckon Hosted) include stock, which newer cloud-only systems don't (although there are add-ons for Xero, thus adding to the cost.)

So how do you choose between these? All have been approved by IRD (unapproved storage of accounting data offshore is illegal). Monthly pricing is one factor - starting from $5 per month for the basic ReckonOne minimum (but probably $10 realistically) to over $150 per month for the top Xero system (prices include GST). Functions are another - if you want something particular you need to check - but as with the desktop systems, basic accounting functions are fairly standard.

Getting your hands on the system is the best way to do this. If you know AccountRight or Reckon from the desktop, then connection speed is really the only unknown - although Xero has one feature available only to "advisors" to partially compensate for the slowness of cloud systems.