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Accounting Software for Family Offices

By: Michael Marinaro

Family offices are a convenient and effective way for high net worth families to manage their assets. But owning and operating a family office is no small feat. There are a variety of challenges that family offices have to tackle, like generational shifts, staffing resources and when it comes to finances, calculating and managing complex accounting data and reports.

Many family offices leverage outdated accounting systems or worse, manually enter information into Microsoft Excel spreadsheets. This is problematic as an office grows and reporting becomes more detailed.

With the right accounting software system, family offices can do away with antiquated processes and drastically increase efficiency. Let’s take a deeper look at why family offices need accounting software.

Why Do Family Offices Need Accounting Software?

Primarily, family offices need accounting software to easily keep track of checkbooks and expenses to see where money is going and keep data organized.

Accounting software enables family offices to track how money is spent. For instance, if you have multiple family members who belong to a particular trust or grouping, keeping track of the fund management for multiple people in a clean and efficient way is crucial. Things tend to get messy if you try to do it in Excel or, in some cases, on paper.

Another helpful feature is that some software can be linked with bank accounts, which enables users to easily download banking information. This eliminates manual data entry, and transactions can be instantly classified into specific categories as they come in from the bank — saving time and making life a lot easier.

The other benefit of accounting software is that it gives users much more visibility into the day-to-day money flow, decreasing the opportunity for fraud. If others have access to the software, you can keep an eye on what is shared, who’s viewing what data and more.

What Features and Benefits Should Family Offices Look for In Accounting Software?

Here are our team's three must-have features and benefits when it comes to accounting software:

  1. The ability to track expenses properly in order to issue Form 1099s and other financial documents.
  2. The capacity to group data by different fund balances or partner balances if multiple people are involved with an organization.
  3. A tie-in with banking or payroll so data instantly loads from the bank or payroll company into the software, saving you from manual data entry.

What Are the Most Common Accounting Software Options for Family Offices?

The two most common software options are QuickBooks and Microsoft Business Central. Many family offices go with QuickBooks. QuickBooks gets the job done and has most of the basic functions necessary to handle the tracking and reporting of accounting data.

But as family offices become more complex due to a higher volume of transactions or are looking for specific integrations with third-party programs and banks, Business Central comes into play.

Why Is Business Central a Good Fit for Family Offices?

Compared to QuickBooks, Business Central is a more robust a solution and offers more flexibility to users in a few different ways.

First, as noted earlier, Business Central can grow with your family office, has better reporting capabilities and allows you to customize your financial statements. While QuickBooks allows for some financial statement customization, Business Central offers more flexibility overall.

With Business Central, you have the capability to report on things outside of basic financial statements like vendor information, different dimensions or fund balances. With QuickBooks, you basically have an account and a class assigned to each transaction. In Business Central, you still have an account assigned to each transaction, but you also have eight additional dimensions that can be set up however you want, such as by fund, partner or project, which provides better reporting.

Users can also get very granular with security in Business Central, in contrast to QuickBooks, where you can only lock things down by role. For instance, if you're an accounts payable point of contact, you can only see accounts payable in Business Central. You wouldn't be allowed to do something like change a vendor's check name.

Business Central can also have up to three accounting users in your system — giving your accountants direct access to grab trial balances, assist with year-end audits and any other necessary tasks.

Lastly, Business Central integrates with Microsoft Office. So, if your family office has a Microsoft Office account for applications like Outlook, you don't have to worry about having a separate login. It's all tied together.

Need Help?

Interested in accounting software for your family office? Contact us here or call 410.685.5512.

Published June 4, 2024

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