Accounting Software: Is “Free” Worth It?

Every penny counts, which is why when you need it, the allure of free accounting software is strong. Who doesn't like the idea of increasing efficiency without adding another line item to the expenses? But as with most things in life, there's a catch. When it comes to accounting software, the old adage "you get what you pay for" rings especially true. While there is a ton of very good “free” and trial software for various accounting tasks out there, users often find that it’s either immediately lacking desperately needed features, or that they quickly outgrow the software’s capabilities.

Is it Really Free?

There are a few products for the accounting world that are completely free. But most are free trials, meaning they want you to get a taste of what will be available when you purchase the full product — if you’re evaluating your options, these trials can be helpful in settling on a final candidate. But be careful to check into pricing before you even dive into a free trial. You don’t want to fall in love with something that’s beyond your budget.

"FREE" AUTOMATED BOOKKEEPING SOFTWARE

This kind of software promises to streamline your financial management. It typically offers basic features like income and expense tracking, and some even dabble in rudimentary invoice creation. The automation sounds fancy, doesn't it? Like having a robotic accountant at your fingertips. However, the reality can be less rosy. The automation is often limited to simple tasks, and the lack of advanced features means you might spend more time fixing misses and errors than if you had entered the data manually to begin with. 

Aren’t Accounting Software and Bookkeeping Software the Same Thing?

The short answer is no, though in a Venn diagram, the circle of bookkeeping software would fall entirely within the circle of accounting software.

Bookkeeping software primarily focuses on the recording of financial transactions. This includes tasks like logging income and expenses, tracking bank account movements, invoicing, and managing ledgers. The main goal of bookkeeping software is to keep a detailed, accurate record of all financial transactions that occur within a business. Accounting software, on the other hand, encompasses a broader range of financial management functions. While it includes all the capabilities of bookkeeping software, it also offers additional features for managing the overall financial health of a business. This includes generating detailed financial reports (like balance sheets, income statements, and cash flow statements), handling tax calculations, and sometimes even forecasting and budgeting.

In simpler terms, bookkeeping is like keeping a detailed diary of what a business earns and spends every day, while accounting is like summarizing and analyzing this diary to understand the overall financial story, make strategic decisions, and comply with legal requirements.

In many modern software solutions, the lines between bookkeeping and accounting software are blurred, as most accounting software packages include bookkeeping features. However, when discussing free software options, the distinction becomes important. Free bookkeeping software might offer sufficient functionality for simple transaction recording but may lack the comprehensive analysis, reporting, and strategic planning tools of more robust accounting software.

For a startup firm, basic bookkeeping software might be enough to start with, but as the business grows and client needs become more complex, the fuller functionality of accounting software becomes necessary.

"FREE" Cloud-Based Tools: A Silver Lining with Limits

Next up, we have the more generalized “Cloud-Based Accounting Tools.” These are the darlings of the modern era, allowing you to access your financials from anywhere with an internet connection. Initially, this sounds like you've hit the jackpot — work without the tether of a desktop application! But the plot thickens. The free versions of these tools often have significant limitations in terms of data storage, the number of users, and the depth of features. If the missing features or functionality are ones you can live without, there’s a good chance that won’t be the case forever. In other words, don’t expect the free ride to last forever.

"FREE" Specialized Software: Tailored but Restricted

Common Limitations: The Not-So-Hidden Costs

The Final Tally: Free Software as a Stepping Stone

So, what’s the verdict? Free accounting software can be a handy tool in a pinch. It’s great for just getting off the ground, providing a cost-effective way to manage basic accounting tasks. However, it's important to recognize its limitations. As your business grows, these limitations can transform from minor annoyances into major roadblocks.

In the long run, investing in a paid solution will certainly be the path firms will need to take. Paid software offers more features, better support, enhanced security, and the ability to scale with your business. It’s a partner in your financial journey, not just a temporary fix.

While free accounting software can be a valuable asset in certain situations, it shouldn’t be seen as a long-term solution for any firm’s needs. As your business grows and your financial management becomes more complex, the limitations of free software will become increasingly apparent. It’s better to view these free tools as stepping stones, useful for getting your feet wet but eventually, you’ll want to dive into the deeper waters of paid accounting solutions. After all, in the world of business, the right tools can make all the difference between staying afloat and sailing smoothly towards success.

Later this quarter, we’ll be introducing Botkeeper Infinite. It’s not free, but at $69 per client per month, the software-only version is the next best thing — automating your bookkeeping with industry-defining AI, providing advisory insights and comprehensive reports, and MUCH more. You can even add services for more time savings. Want a chance to get in on trying it out early? Sign up for our waitlist!