Accounting software comes in two forms: desktop and cloud based. Desktop software tends to be easier to install and manage, but requires a lot of maintenance. Cloud based software allows users to access their accounts remotely, and can also sync files between multiple devices. Both types of software offer similar features, although they may differ in how much control the user has over the system. For example, if you're working with a business partner who uses a different accounting program, you might find yourself having to manually enter information into each account. With cloud based software, however, you could easily share documents and information across platforms, allowing your accountant to view your books without ever needing to log onto your computer.
There are several common types of files:
The OFX/QuickBooks Online (QBO)/QBFC (Bank Feeds Center) file format is the most commonly used format for bookkeeping purposes because most financial institutions support the format. Most banks allow downloading QBO or QBFC files from the online banking interface. Some banks only provide access to data within the last 90 days, and others do not provide any access to historical data. Accounting software imports transactions into accounting software for further analysis and categorization. For example, QuickBooks imports QBO or QBFC statements into the Bank Feeds Centre, where you match downloaded payees or transaction descriptions to vendor record and assign expense/income account numbers (‘category’). Quickbooks learns your matches, and uses them for future QBO imports or direct bank downloads.
The QIF format is among the oldest widely supported formats for exporting and importing transactions. Its popularity stems from its ability to store information about accounts, such as account names, balances, transaction amounts, dates, and so forth. However, it also supports many features that aren’t found in any other popular exchange format, including categories and tags. Because the format has undergone various extensions over the years, it can be difficult to convert between them. One problem that often arises is that the QIF files exported from older software may not be compatible with newer software. In order to ensure compatibility, some companies may require that users upgrade their software before they can view data stored in QIF files.
The IIF format has been developed by Intuit for their Quickbooks product line but is now used by many different applications. Before importing an IIF file, back up the company file first so that you don't lose any data if something goes wrong.
The QBJ format is the newer format, but it is also a great option to import your transactions from the General Journal Entries. You will get full audits for each General Journal Entry so you can see exactly what was entered into QuickBooks. The only downside is that entering these entries through the QuickBooks interface is not as quick as entering them through an excel spreadsheet. Compared to QBO formats, QBJ format is very advanced. You can create multiple debit and credit accounts, assign accounts, classes and there is no limit on how many accounts you can add.
The CSV format supported my few accounting products like Quickbooks Online. It is a good choice if you have your transaction entered into a spreadsheet or download from your bank as a.CSV file. Unlike QBO,IIF, QBJ formats, which are defined formats where data can be interpreted only one direction, CSV format is a "free-form" format. You may have 2 date columns, columns not related to details that an accounting program can import. The date formatting could be different (day/month vs month/day), and the amount format could use different decimals or thousand separators. You may have transactions take one line or multiple lines. A CSV file might have the first line as a header, or the first couple of lines aren't transactions, but statement details, so you may have to reformate the CSV file (open it in a spreadsheet software, change, and then save as another CSV file) before importing it into Quickbooks.
The PDF format was developed to be a universal method of storing electronic documents. In order to make them viewable on any device, they must be converted to a suitable format before viewing. Most commonly, this involves converting them to HTML5, CSS3, or plain text. However, if you wish to convert your PDFs to another format such as Microsoft Excel, then you'll need to purchase additional software.
You should always check for available formats when choosing a bank and supported formats when choosing an accounting system. Also, having conversion tools available is important if you have a large client base.