DECEMBER 2, 2018 UPDATE
Having used WAVE ACCOUNTING for over 3 years, we were quite satisfied with it, for our small consulting practice. However we had never used it in a situation where multiple currencies were necessary.
While WAVE does provide multi-currency capabilities, the reporting for US-denominated banks, AR or AP does not allow for reporting at run time in either the local currency or the foreign currency. This could be a factor and might lead to higher bookkeeping and review costs.
This may not be a deal breaker, but should be considered as a factor when deciding on which online service to use.
I used to say “choose your bookkeeper NOT your accounting software”. That is probably still good advice, BUT it’s awfully difficult to hire someone for a function that you don’t fully understand.
In fact it’s just about as hard as selecting a tool for doing something you don’t know how to do. If you knew how to do it, it would be much easier to know which tool to buy.
What is a Startup Anyway?
The first thing you’ll need to consider is the kind of business you actually are – and what you’re trying to be. I’d like to refer you to another post that discusses this issue in detail –
For someone at a very early stage the answer will be different than it would be for a venture-backed startup with 15 or 20 employees…
I recently read a post from an self-described “outsourced CFO” by the name of Seth David:
Now, if you’re a business owner who just wants to keep the books for a business, then you probably have no idea what I am talking about, and I’m equally certain you wouldn’t care. That is until you decided to hire someone like me—an outsourced CFO. And you do that because you want the strategic analysis and guidance. You want to take your books beyond compiling a tax return once a year, and you want to analyze the information. – Seth David, Fundera
Mr. David is right “if you’re hiring an outsourced CFO”,…
but you won’t be hiring one if your company is at a very early stage. So if you’re planning on hiring an outsourced CFO right away, ask them to recommend the software. It’s been my experience though, that most early stage companies are at least 4 or 5 years away from hiring a CFO.
In fact most “outsourced CFOs” are really more like public accountants – typically with an accounting designation and 5 or 6 clients. They mostly operate without the overhead (or regulation) of CPAs in public practice, and provide bookkeeping and accounting services at discounted or “bulk” rates.
My perspective is different than Seth David’s – primarily because my clients need tax advice (primarily for tax incentives) and need to file tax returns.
If your company is a little further along in it’s development, Seth David’s article is certainly worth a read…
For a “seed stage” company – or a new “lifestyle business” with 5 or fewer employees, the volume of transactions is really trivial. So the choice is probably simpler:
choose a bookkeeping service that meets your needs and let them choose the software
choose QBO or Xero if you actually need multi-currency support (bank accounts or invoicing in US dollars – or other non-Canadian currency)
if you have a bookkeeper on staff (why? – the number of transactions is trivial anyway) – choose WAVE unless the bookkeeper is experienced and has a preference – or you need multi-currrency support (see 2 above)
WAVE ACCOUNTING is 1 of 3 online accounting packages we use and recommend for Canadian small businesses.
Each of the 3 packages will function adequately for the needs of this kind of business. For me WAVE gets the nod because it is basically free – unless you need multi-currency suppoort. However the annual licensing cost for the most expensive option is only about $700 (Xero lists it’s pricing in USD). If that is a minor consideration for your business, you may want look in more detail at either QUICKBOOKS ONLINE or XERO.
In future posts we’ll discuss the different approach and business models of these 3 suppliers.