Ultimately, the real reason you’re using cloud accounting software is to get your reports. You need them to file sales taxes, the accountant needs them, and of course you need them to see how your business is doing financially.
Cloud Accounting Reporting
Reports are judged based on these 5 things:
- Basic reports: These are reports like Profit and Loss, Balance Sheet, Trial Balance, Accounts Receivable, Accounts Payable, General Ledger / Journal.
- Customization of reports: This is the ability to customize your reports by things such as: date, accounts, and fields.
- Advanced reports: These are any reports beyond the basic reports.
- Budgeting: This is the ability to create a budget to track your profit and loss against.
- Report memorization: This is the ability to save your custom reports to be viewed at a later time.
The clear winner when it comes to reporting is QuickBooks Online. It has the most comprehensive and customizable reports. All the reports are memorizable and its budgeting capabilities are the best (although it is fairly basic). If you’ve ever used the Windows desktop version of QuickBooks, you’re aware of the variety of reports that QuickBooks Desktop has. Unfortunately, there are not as many reports in QuickBooks Online as QuickBooks Desktop. Despite this, QuickBooks Online still has more built-in reporting functionality than any of the other accounting software out there.
Coming in second is Xero. It’s fairly similar to QuickBooks Online capability-wise, but overall it’s not as strong. Perhaps the most obvious difference between the two is that QuickBooks Online offers better report customization.
Most accounting software offer the basic set of reports, and for many small businesses, this is all that is really needed. However, if you have specific reporting needs, it is wise to trial the accounting software you’re planning on using before investing too much time into it. Also be aware that for some software you are able to enhance it’s reporting capabilities via either third-party additions, by exporting the data and manipulating it in a spreadsheet, or via the software’s API.
FreshBooks has limited basic reports since it doesn’t follow accrual accounting with a full set of chart of accounts (asset, liability, equity, income, and expense accounts). This means that the basic reports that FreshBooks provide won’t necessarily be accountant-ready. Your accountant can use the data, but he/she’ll probably need to modify the reports a bit to make proper use of them. FreshBooks does provide some advanced reporting around invoicing and time-tracking though.
See the next installment in this series – Sales Tax
For a complete list of the articles in this series – Cloud Accounting Introduction
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