At its core, Microsoft Office offers a suite of tools that nearly everybody uses, regardless of their profession, with Word and Excel being the most popular. Over the years we’ve provided extensive tips on formatting your resume in Microsoft Word and shared several posts with tips to use Excel to its maximum potential.
Throughout our many posts, we have suggested a time or two that IT contractors could use Microsoft Excel for accounting; however, that suggestion always comes with a caution that as powerful as it is, Excel doesn’t easily cover all of your accounting needs. In a recent blog post, Freshbooks also cautions against using Word and Excel to manage your books, even if it’s something that’s always worked for you. While we admit, Freshbooks is a biased source given its product is accounting software, they do make valid points to consider:
You’re Probably Making Mistakes in Word and Excel
Because these Microsoft tools are not created specifically for accounting, Freshbooks argues that it is easier to make mistakes that cost you time and money. For example, fixing small formatting issues in Excel is quick, but frequently making those fixes will quickly take more and more time. Or, maybe you accidentally save over (or forget to save) IT project estimates you create in Word. Then you may have to unprofessionally ask your recruiter or client to send it back to you a month later.
Tracking Cashflow Is Not as Easy
The example Freshbooks provides in their argument is that their product allows for online payment so you can get paid faster, even in a mail stoppage. But a great accounting program will help your cashflow beyond that example in ways that Excel and Word will not do as easily. If you juggle multiple clients and staffing agencies, accounting programs can track their payment status and trends to know who is better at paying. In addition, they will notify you who has yet to pay, automatically send reminders and notify you when it’s time to follow up. If you’re a pro with MS Office, you can probably set these features up on your own, but they will not run quite as smoothly.
Tax Time is Not as Easy
All independent contractors are well aware of the importance of filing your taxes properly. While your fantastic accountant takes care of everything at tax time, they will be thrilled to learn you moved away from Microsoft Office and onto an accounting software. These programs track your expenses and help manage all documentation that come with them. They can also automatically generate reports and calculations based on your tax requirements. The easier you can make tax time on your accountant, the less time it will take them to do your books, and the less they will have to charge you.
The software you choose to use to manage your IT contracting business is a decision to be made based on consultation with your accountant, in combination with your own knowledge of accounting. While this post was inspired by a Freshbooks article, there are many other options and we encourage you to explore them all. One thing is certain, though. If you choose to use programs such as Word or Excel, you will have more inconveniences and mistakes.