Any small business needs a good bookkeeping system. Without it, you’ll never know how the business is doing and whether it is profitable. Without it, you’ll have big problems at tax time because you won’t have accurate information to report on your income tax return. So it’s critical that you find a reliable bookkeeping program to track your income and expense information.
Two of the most popular and reliable programs are Quicken and QuickBooks. They’ve been on the market for many years and have stood the test of time. Either of these programs will likely provide the type of record keeping you need in virtually any small business or self-employment activity.
So now the question becomes: which one should I use, Quicken or QuickBooks. The answer to this question depends on the size and nature of your business. Think of Quicken as “Bookkeeping Lite” and QuickBooks as “Bookkeeping on Steroids”.
Generally speaking, smaller and less complex businesses can often do fine with Quicken. It provides a simple user interface for doing basic transactions like customer payments, expenses, and all associated bank account records. It can also track all your credit card charges and payments. The best part of Quicken is that it enables you to easily assign the appropriate tax deduction category to every expenditure, whether you pay by cash, check or credit card. This is critical for tax reporting purposes, because at the end of the year you can produce a simple one-page income and expense summary report (aka “Income Statement” or “P&L Report”) that your accountant will love.
But as your business grows and becomes more complicated, you may need a more sophisticated program like QuickBooks. If you have employees and do your own payroll (issuing paychecks, tracking payroll withholdings, making payroll tax payments and filing payroll tax returns), then QuickBooks is for you. If you sell products and need to track inventory, use QuickBooks. If you need to track sales tax, QuickBooks can do that.
QuickBooks itself comes in many different flavors. There’s the basic program, known simply as “QuickBooks”; and then there’s the more powerful “QuickBooks Pro” and “QuickBooks Premier”. There’s also a line of QuickBooks versions for particular industries. So be sure to read the program descriptions carefully to determine which features you may or may not need. There are numerous choices and many bells and whistles.
Of course, Quicken and QuickBooks are not the only competent bookkeeping programs on the market. But they are two of the best, and their reputation and customer base speaks for itself.