Just about every family office starts out with QuickBooks as its accounting system. And why not? QuickBooks is extremely easy to learn, and you can be up and running in minutes. Not to mention it’s dirt-cheap at only a couple hundred bucks.
But the family office grows and the number of business entities multiplies geometrically. Soon you have more than 50 different QuickBooks files and feel completely overwhelmed. This is a very common occurrence as QuickBooks was NOT designed for the family office world. Rather, QuickBooks starts to feel like a square peg being shoved into a round hole.
Don’t despair; there are accounting systems out there that can handle your complexity (e.g. Microsoft Dynamics SL). While these systems are more expensive and take much longer to setup, they easily pay for themselves in increased efficiency when properly customized for family office intricacies.
Here are three signs your family office should ditch QuickBooks:
- Entering Partnership Value Adjustments Takes Hours, Not Minutes
A more advanced system will let you copy and paste multiple transactions straight from Excel or something similar. This means you can setup all monthly journal entries just once and paste them into the accounting system each month with very little work! This beats manually entering journal entries one at a time in QuickBooks.
- You’ve Lost Control of Your Inter-Company Balances
An accounting system like Microsoft Dynamics SL puts all of your entities in one database. This means all entities can easily transact with other entities. This makes booking inter-company transactions a breeze. Whereas you had to open multiple QuickBooks files just to accomplish a single inter-company transaction, you can now book a single journal entry that hits both entities. This reduces the chance for human data entry error.
- You Need Multi-Entity Consolidated Reporting
The family trusts (i.e. clients of the office) almost always invest in many different assets. And usually they own less than 100 percent of an asset. Therefore, the ability to consolidate entities and a percentage of another entity is extremely useful. No longer do you need to export multiple trial balances from QuickBooks and manually consolidate them in Excel.