If there is one thing that we can all agree on, it’s that bookkeeping ranks among the least pleasant aspects of owning a farm business and with three primary ways for you to manage your farm books and records: a manual ledger, desktop accounting software, and cloud-based accounting software. Which option is best for you?
Ultimately, there are three factors to consider when deciding on the best approach for managing your farm books: cost, time, and risk. When it comes to cost, a manual ledger book is obviously the least expensive option to set up and use. Meanwhile, desktop accounting software involves a higher single cost than a manual ledger, while cloud-based accounting software often requires an ongoing monthly or annual subscription fee.
When it comes to time management, a ledger book can be extremely time consuming with the manual addition of page totals, repetitive entries every month and an inability to automatically generate accounting, HST, or payroll reports. On the other hand, both desktop and cloud-based accounting software enable automatic totalling, balance sheet amount roll forward, a vast array of reports, and with cloud-based accounting software, you can easily share real time data with key advisors. Of course, with software and technology, there is the additional need for computer proficiency, and in the case of cloud-based software, there is also the requirement for high-speed internet in order to avoid work slowdowns.
When it comes to risk management, the manual ledger book is at a higher risk of physical damage from fire or other causes resulting in the complete loss of data. Desktop or cloud-based software offer much greater opportunity to save backups with cloud-based solutions providing completely off-site backup solution to minimize the risk of disruption. At the end of the day, each of these three solutions for managing your farm business books offer both strengths and weaknesses.
Determining the best approach for managing costs, time and risk is a completely personal preference. If you would like to learn more about farm business accounting tools that might be right for your business, contact Allied Associates.