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How do I choose the right accounting software for my business?

One of your top priorities as a small business owner is keeping a close eye on the money you bring in and pay out, which is why it’s critical to have the right accounting software. You need a program that helps you accomplish your daily accounting tasks – recording payments, tracking expenses, invoicing customers and reconciling transactions – and gives you insight into your business’s financial health, allowing you to generate reports that help you analyze your business’s performance from multiple angles.

But choosing the best accounting software for your business is challenging. Each program includes a different set of features, and most offer multiple pricing plans to choose from, which also vary by feature, number of users or other factors. Here are three items to keep in mind when selecting accounting software for your business:

  • Costs. Would you prefer inexpensive, basic accounting software or an application that costs more but includes extra features?
  • Usability. How many users need to access the software? Do you prefer a cloud-based system that you can access anywhere or desktop software? Do you need it to have a mobile app? What capabilities do you need the app to have?
  • Features. What do you need the accounting software to do? Do you need both accounts receivable and accounts payable tools? Which reports do you need it to generate? Do you need it to track inventory? Do you need it to include ancillary services, like time tracking, project management and payroll?

Things to Consider When Choosing an Accounting Software for Your Business

CONSIDER YOUR ACCOUNTING SKILLS

If you own a small business or start-up, finances might not be your specialty.

You might be a small operation without a finance department, but you still need to be on top of your company’s accounting. There are a variety of options on the market for accounting software but make sure you find one that matches not just your needs but your capabilities too. While accounting software makes bookkeeping easier, you still need to have a basic understanding of your finances and what you need the software to do for you.

Do your homework, so that you pick the right program and get the most of its functionality.

THE BENEFITS OF CLOUD-BASED APPLICATIONS

Switching to a cloud-based application can benefit your business operations in several ways. The software can be accessed from any location with an internet connection on tablets, laptops, and smartphones. Having this easy access to your accounting software at any time from anywhere can help you keep your bookkeeping consistently up-to-date.

You won’t need to worry about having an IT department to manage the installation of software upgrades because that is all done through the server. Plus, your records are secured from a physical location where safety might be jeopardized by a local disaster, theft or another destructive event.

OPTIONS THAT WORK WITHIN YOUR BUDGET

You can find an accounting software suitable for all budgets. While you can find cheap and even free applications for download, consider if these options are useful to your company’s business operations. While you might pay more for some accounting software, it could very well minimize common accounting errors that could save you time and money, and it might be worth the additional cost.

Many accounting software applications have tiered pricing levels so that you can pay for what you need and get the best results.

WHAT FEATURES DO YOU NEED?

To help you decide what accounting software program to choose, ask yourself what features you need to run your business. Here are a few things a small business might need from their accounting software:

  • Budgeting
  • Sales tracking
  • Payroll
  • Inventory management
  • Merchant account support to accept credit card payments
  • Manage customer contacts or work with your current contact management software
  • Estimates
  • Business tax reporting
  • Invoicing

How to Choose Business Accounting Software: Understand Your Accounting Needs

The first step you need to take in choosing accounting software for your business is to undertake a good needs analysis, which will address both managerial and financial needs. It should be broad, exploring both obvious questions and ones that really make you think. Take your time with this important step, since the last thing you want is to have to repeat this process within the next two years. If you experience unexpected growth that forces an upgrade, terrific, but good planning at this stage can help you avoid having to change software too soon. Get some help before you buy anything.

Questions to ask when choosing your accounting software

Sales:

  • What are you selling?
  • How do you sell? (Platform)
  • How do your customers pay you?
  • What processes or infrastructure do you need to make sales work effectively?

Expenses:

  • Do you have contractors, employees or other providers to pay?
  • What are your inventory, shipping & customer support costs?
  • Where do you save your receipts?
  • What processes or infrastructure do you need to handle expenses effectively?

Payroll:

  • Do you have employees and are you required to follow employment law?
  • How large is your staff?
  • How often are they paid?
  • Do they get paid for holidays and sick leave?
  • Do they earn superannuation or 401k?

Reporting:

  • What reports do you need?
  • How flexible is the Chart of Accounts and reporting layout?
  • Can it be customised to your needs?
  • Is the standard Chart of Accounts suitable?
  • Do you need departmental, location or job reporting?

Don’t Pay for Unnecessary Features

A smaller, less complex business needs fewer features than a larger business does. No matter how irresistible extra “whistles and bells” seem, resist the temptation to buy more accounting software than you need.

Generally, you pay more for additional features in accounting software. If your business grows enough to need more robust financial features, the cost is justified, but until then you should stick with the basics. For smaller businesses, there are now enough accounting software options available that over-buying is unnecessary.

Consult With Your Accountant

Accounting software does not replace an accountant for ensuring that your business adheres to legal and accepted accounting and tax practices. But when you use accounting software, your accountant won’t have to spend time doing certain tasks, which saves money for a small business.

Any good accounting software will have the reports you need to give to your accountant on a monthly, quarterly, and annual basis. Ask your accountant what reports are needed and be sure you can generate them with the accounting software you are considering.