Banking

DIY: Accounting on a shoestring budget with GnuCash

GnuCash is a free, open source, and cross-platform accounting solution that Jack Wallen says is more reliable than QuickBooks. He discusses GnuCash's features, as well as two of its drawbacks.

Intuit QuickBooks is most small business users' first choice for accounting software, but it might not be the best option for your shop. You have to think about whether your company has the budget for QuickBooks (that budget must include the Intuit updates, which are usually every other year) and how much you will use the software (in my experience, the majority of QuickBooks users only use a fraction of the features). Based on these factors, it might be worth your time to look at other accounting solutions.

My accounting software preference is the free, open source, and cross-platform (Windows, Linux, Mac OS X) solution called GnuCash. Based on my extensive experience with GnuCash and QuickBooks, I have found GnuCash to be far less frustrating and far more reliable than QuickBooks. GnuCash is also less prone to crash, lock up, or develop issues within the data file.

Unlike QuickBooks, each platform of GnuCash offers the same features, which include:

  • Double-Entry Accounting
  • Stock/Bond/Mutual Fund Accounts
  • Small-Business Accounting
  • Customers, Vendors, Jobs, Invoices, A/P, A/R
  • QIF/OFX/HBCI Import
  • Transaction Matching
  • Reports, Graphs
  • Scheduled Transactions
  • Financial Calculations
  • Statement reconciliation
  • Localization
  • Powerful transaction query
  • Online Stock and Mutual fund quotes
  • Check printing

Installing GnuCash

The installation on each platform is incredibly simple.

  • Windows: Download the GnuCash installer, double-click, and you're on your way.
  • Linux: Open your Add/Remove Software tool, search for "gnucash" (no quotes), mark it for installation, and click apply.
  • Mac OS X: Download the installer for either Intel or PPC architecture, mount the image, and install.

Setting up GnuCash

After the installation, one of the most important steps is selecting the types of accounts to set up for your company. Instead of just setting up a standard checking account, you should add Business Accounts from the category (Figure A). Figure A

When you select Business Accounts, the setup wizard will display all of the accounts and sub-accounts that will be created.

During the setup wizard, you can add as many accounts as you need. Depending on your business, the following accounts might be necessary:

  • Common Accounts
  • Fixed Assets
  • Investment Accounts
  • Other loans
GnuCash has a tab-based interface and is quite simple to use. Although there are no user-configurable home screen buttons, GnuCash has user-friendly drop-down menus and expandable navigation trees (Figure B). Figure B

Click the image to enlarge.

Figure B shows a New Budget. You can create budgets based on any accounts included in the data file.

Two drawbacks to GnuCash

GnuCash does not have a client/server mode. Once GnuCash develops this feature (I think it's in the works), I bet it will have a much larger user base. Until that happens, GnuCash is limited to a single user, client-only model. The data file can be stored on a server and shared out, but only one user can have that data file open at a time.

GnuCash's other drawback is its lack of integration with any tax software. There is a reason for this. In the United States, the tax laws change every, and keeping up with those changes would be nearly impossible for the GnuCash to implement. However, a good accountant will be able to gather a wealth of information from within GnuCash when she completes your taxes. (GnuCash even has a Tax Income/Deductible Expenditures report.)

Conclusion

Despite these two issues, I still highly recommend GnuCash.

GnuCash has been my financial solution for years, and there has never been a moment that I wanted a different option for my accounting needs. Anyone looking for a business-ready, cost effective accounting solution should consider GnuCash. It doesn't require much of a learning curve (depending on how advanced your needs are), though GnuCash may call for a little more thought and planning than QuickBooks does, but that will just allow you to use some of your DIY skills.

Also read: Five tips for making GnuCash work for your business.

About

Jack Wallen is an award-winning writer for TechRepublic and Linux.com. He’s an avid promoter of open source and the voice of The Android Expert. For more news about Jack Wallen, visit his website getjackd.net.

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