Small business saved by software:

Affordable accounting software makes life easier for resilient SMEs

For many small businesses, 2020 has unquestionably challenged the resolve of the most resilient, with research accounting software provider MYOB revealing that 58% of SMEs say the Covid-19 pandemic has negatively impacted their business.

But don’t be discouraged. Another study by accounting software provider Reckon shows that business leaders with high resilience are far less likely (29%) to consider giving up on their business compared to those with low resilience (70%).

Besides, highly resilient small business leaders are more likely (47%) than average (38%) to use accounting software platforms such as Reckon, Xero and MYOB to help them reach their goals.

Get online or fall behind

Surprisingly in 2020, 41% of SMEs still don’t have an online accounting solution, and 24% have no accounting solution at all, according to the MYOB Brand Monitor, March 2019-2020.

As a small business owner myself, the decision to switch to cloud-based software transformed our bookkeeping and saved plenty of coin. Previously, bringing the accounts up to date was a painful fortnightly event involving a bookkeeper and pages and pages of bank statements. Now, checking on outstanding invoices, reconciling payments and scrutinising cash flow and profit and loss is a real-time service easily accessible from a smartphone or desktop.

Many of the accounting software packages also offer the holy grail of bank feeds. Another game-changer for my business, a bank feed is an automatically created list of transactions from a credit card or bank account that is delivered directly to the accounting software. The software program matches the bank feed with a client invoice or an expense. Like some sort of

bookkeeping sorcery, with a click of a button the transaction is reconciled immediately.

Once you’ve determined to leap from spreadsheets and bank statements, the next step involves weighing up the cloud accounting competition, namely, Reckon, Xero and MYOB.

Reckon

If you’re starting an SME, Reckon One Basics is a $7-per-month package that allows you to undertake several activities such as enter payments and expenses, track and report GST, reconcile bank statements, check cash flow in real time and create budgets.

The rub with Basics is that it doesn’t let you raise invoices or bills or provide bank feeds. However, as an entry point into cloud accounting, Reckon One is up to 75% cheaper than some of the competition. This saving can be significant for a fledgling small business.

Reckon One Essential is the next rung up at $17 a month. This plan lets you create unlimited invoices and bills and provides bank feeds. Once you bring in some employees, you’ll need to consider Reckon One Pro, which comes with a subscription of $24 a month.

If you start to expand rapidly and need employee timesheets, there is Reckon One Premium at $36 a month. Also, if a business needs payroll, it can choose Reckon One Payroll for $7. This plan covers payroll for unlimited employees and makes your single-touch payroll (STP) compliance and JobKeeper payments a breeze.

Gaynor Jeffrey, chartered accountant at Db Jeffrey in Mandurah, Western Australia, says Reckon One is suited to small businesses because of the platform’s pricing. “Reckon One is very functional and compares well with MYOB Essentials and Xero,” she says.

“Its user interface is simple, and when it comes to reporting you can get a lot of information from it. Possibly not as much as Reckon’s premium desktop products and Xero. But it compares well to MYOB Essentials. If you’re a small business starting out and you’re watching costs, I’d recommend the Reckon One range.”

Xero

Xero isn’t the cheapest service on the market, but the software provider assumes even the smallest start-up will be invoicing clients relatively quickly. Therefore, with Xero’s Starter Plan, an SME can send five invoices or quotes to customers each month, enter five bills and reconcile 20 bank transactions. Starter also allows for a payroll of one employee. The monthly subscription is $25.

If you have two people in the business, then consider Xero’s Standard monthly subscription of $50. With Xero Standard, your SME can send unlimited invoices and quotes, enter bills and reconcile bank transactions via bank feeds.

For those who’ve been in business a bit longer, try Xero’s popular Premium 5. For $60 a month, a company can send unlimited invoices and quotes. There’s also unlimited bill entry, bank reconciliations and payroll for up to five employees, as well as automated employer superannuation contributions. If you want to add employees to the business, the additional monthly fee is $10. For every extra employee, Xero charges $7 each.

Katarina Vencel, from Vencel & Co Accountants in Sydney, says Xero is excellent across the board. However, the experienced accountant has some clients who prefer MYOB’s inventory functionality.

“When it comes to comparing the accounting platforms, you should compare price, functionality and what your business requires. For example, if you need inventory management, MYOB is better than Xero,” she says.

“SME owners should talk to their accountant and bookkeepers, who can get them even cheaper packages through Xero.”

MYOB

Sydney-based accountant Anita Pavlovic, from Anita Pavlovic Business Advisory, recommends clients to choose between MYOB, Xero and Reckon based on several variants. “The lifecycle and nature of the business, as well as whether they are using a bookkeeper, will determine what software I recommend they use. The basics are similar and how you use them often depends on your business experience,” she says.

MYOB Essentials Starter is available from $27 a month and is perfect for those launching into small business. Starter offers STP reporting for one employee, allows you to pay a single employee and track and prepare your business activity statement (BAS) and goods and services tax (GST) obligations. Starter also offers 25 bank reconciliations a month.

There are six MYOB plans for SMEs ranging from $27 a month to $70 for AccountRight Premier, which is for businesses that manage multiple company accounts. Apart from invoicing and bank feeds, MYOB Premier also offers Single Touch Payroll and Superstream, job tracking, inventory tracking and multicurrency reconciliations.

“MYOB has been around the longest, and I have used it for over 20 years,” says Pavlovic. “MYOB Essentials is easy to use if you’re raising invoices and paying bills and is cost-effective. Once you require more complex accounting services, then you’d start to look at MYOB AccountRight.”

AccountRight has more bells and whistles than the competitor.

“It’s suitable for more complex businesses where you have foreign currency [transactions], are an importer or exporter, or you have [customs] duties, and transactions across different costs centres.”

At the time of writing, MYOB was offering 50% off all its monthly plans for the first three months of a subscription. According to a company spokesperson, these discounts will still be available in July.

When choosing the right cloud computing software for your business, there are no right or wrong decisions. Whichever software you go for, it will be an improvement on clunky spreadsheets, as the likes of Reckon, Xero and MYOB will streamline your bookkeeping and let you focus on what you do best, which is running your business.