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The cost of free bookkeeping, accounting and payroll software |
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Written by Nilsson Denver
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Sunday, 22 August 2010 21:02 |
The cost of free bookkeeping, accounting and payroll software
Many software companies offer free versions of their software. Here are some of the problems with using their free version
1. It is usually a slimmed down version of their full price software with many functions removed
2. If you have a problem with the software, the free support (if any) is by email only and your email is not prioritised, so when you get an answer to your query is unknown
3. Software support so that you can talk to a real person usually costs money. This can be a cost per call or an annual support contract
4. Software updates may not be included. If the program needs to be updated, you may have to pay for these updates. Also you will have to install them yourself and if you need support in installing the software update, you will need to pay for this installation support.
5. Each country can have different ways of handling VAT. Lets compare Ireland and the UK, two countries that have a very similar VAT system.
Differences
UK VAT is done every 3 months
Irish VAT is done every 2, 4 or 6 months
An Irish user cannot use software that only allows VAT to be calculated every 3 months
Irish VAT must be split between items bought for resale and items or services not for resale
VAT can be calculated on a cash receipts basis
In the UK and Ireland, this means you only have to pay over the VAT on sales to the taxman (Inland revenue - UK, Revenue Commissioners - IE) when you get paid and not when you raise the sales invoice
But when it comes to the suppliers side and purchase invoices
In the UK you claim VAT back on supplier invoices when you pay for the supplier invoice and not when you receive the suppliers invoice
In Ireland you can claim VAT back on a suppliers invoice as soon as you receive it. When you pay for it is irrelevant
In the USA they do not have VAT they have a sales tax. And for each sales there can be multiple different sales taxes, state tax, city tax, municipal tax
Item 5 brings up a few issues
A. If you don’t understand what cash receipts basis is, then buying free software or paying for software is not going to help you. And if you do get help you have to pay for that help.
B. If you don’t understand how VAT works, then buying free software or paying for software is not going to help you. And if you do get help you have to pay for that help.
6. Free software does not come in a box with a CD and printed manual. You download the software, you download a manual (not necessarily a training manual) and have to print it out at your own expense.
The one point everybody is blinded to when the see free software is the cost of training. Onsite training on your premises, the average cost is €100 per hour. If a friend offers you free training because they use the software, they have to give up their time and you have to give up your time and you may feel obliged to buy them a gift for them giving up their time, which is a cost. Is this friend a trainer? Does this friend know what they are doing or just passing on bad habits they have to you. A person trained properly in the software can show you all the options available to you in the software.
The best comparison I can think of is a car. A car dealer offers you a free car, but you don’t know how to drive properly. You think turn the key, put your foot on the pedal and you go. But you never learned the rules of the road. you know the road signs mean something. You don’t know how an engine works, but if the car breaks down you will have a look at the engine and examine the user manual.
But when you can’t get the car started you find you have to pay a mechanic to fix the car, you also have to pay road tax and car insurance, and to keep it running you need to put oil and petrol in the car. Also if you crash the car it takes an expert to tow it and fix it up again. So much for a free car.
Yet we understand the importance of driving a car, the licencing requirements, insurance,taxed fuel, servicing and care that needs to be taken with a car. Yet at the same time people are willing to gamble their businesses finance on free software. You got a licence to prove you are qualified to drive a car and if you need to drive bigger vehicles you need to upgrade you licence.
Yet many people feel that if they get free software they can learn from scratch how to do their bookkeeping, accounting and taxes. How can this be?
If you choose to employ a bookkeeper or accountant make sure they are suitably qualified. In many cases when a married man sets up a business, his wife miraculously becomes a bookkeeper overnight. When you buy a car, you don’t become a driver automatically, you need training.
Free software is great if you know what you are doing and you have the time to teach yourself how the software works. But this assumed you have experience in bookkeeping (or driving a car if making a car comparison).
Software companies want to get you hooked on their software so they offer free software in the same way a drug pusher gives free samples to get a person addicted. Then they charge you when you come back to them for more.
Remember free software is expensive. |
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Last Updated on Sunday, 22 August 2010 22:09 |
