When it comes to setting up an accounting platform for your business there are a myriad of options available to you.   Finding the right one is the challenge.

In this article we are looking at proprietary software. The Linux Information Project defines proprietary software as “software that is owned by an individual or a company (usually the one that developed it). There are almost always major restrictions on its use, and its source code is almost always kept secret.” The majority of accounting products you find online that promise a seamless, cost-efficient, user-friendly, and perfect-for-you accounting solution are built using proprietary software.   For some individuals and businesses this is absolutely fine and exactly what they are looking for. For others, it starts off well and ends badly.

So how do you know which group you belong to? There are a few points that you will need to take into consideration to make the best decision.

Business Growth

Business growth is great thing, however with it comes a whole new set of challenges. We have had companies come to us because they simply outgrew their online accounting service. Most times what has happened is that as they grew they required a wider range of services and additional users. Once these were added to their accounts they realized that the costs were much higher, and in some cases more than some of their employees salaries.   Obviously at this point, it’s no longer a cost-effective solution. This also highlighted, what we think, is one of the biggest issues with proprietary software – ability to transfer data.

Data Transfer

If you decide for whatever reason to leave a company that is using proprietary software getting your financial data over to your new provider can be extremely difficult and in some cases, altogether impossible. When you sign up for a service utilizing proprietary software, you are simple renting their product and space on their servers. You do not own the product and have no control over the processes put in place when you decide or need to leave. You can’t just transfer years of your financial data into another program. This is one of the main pain-points that is a difficult realization for many companies.

Reconciling Accounts

Your bank accounts need to be reconciled every year.  In 2017 there are very few online accounting solutions that can reconcile accounts appropriately. This means that at some point, you will need to reach out to an in-person firm to get this done. This process is significantly easier if the firm is already up-to-date on your finances.

There are additional topics to take into account regarding online accounting services such as security, scalability, user-agreements, non-transferable skills & training, customer service, cost, time, and third party access. These issues will all be address in following articles in the weeks to come.