How to Choose Small Business Accounting Software
Now that you’ve decided to start your own business you will want to know how to choose small business accounting software – it’s not as difficult as it may seem. You should take into consideration the fact that this is one of the most important choices you will make in your business. This section helps outline what to look for in accounting software, as well as good software packages to begin with, and tips on making sure you get the most out of what you purchase.
The choice of Small Business Accounting Software is a very crucial decision in the life of any business. Listed below are certain aspects to be considered before making a final choice of Small Business Accounting Software:
One of your top priorities as a small business owner is keeping a close eye on the money you bring in and payout, 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 in features, number of users and 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?
But with so many options available, finding the right accounting software for your business can be difficult. Below are five tips to help you find the software that will best serve the needs of your enterprise.
1. Consider both your needs and your accounting skills
Your best bet for finding the right accounting software is to look at how your business operates, and then take careful stock of the different types of software on the market. If your business makes several million dollars a year, it will have very different accounting needs than one that makes less than $50,000. You have a variety of options when it comes accounting software products, including those designed specifically for small- and medium-sized businesses.
Depending on your industry, you might want to consider specialized software that is designed to help businesses in your niche. For example, there are applications customized for businesses in the manufacturing sector, for retailers and restaurants, as well as for many other types of commercial enterprises.
Doing your research is important, because the application you choose will directly impact how your revenue is managed. It is also important to consider that even though accounting software can make the task of keeping books easier, it still requires a certain amount of financial literacy. As sophisticated as an application may be, it is still only a tool. Those using the software must know what to do with it.
2. Look at cloud applications
With cloud computing becoming a more prominent influence in modern business, it is important not to dismiss the many online accounting applications available.
Cloud applications come with a variety of benefits. They can be accessed from any location with a strong Internet connection, and you don’t need to purchase software licenses or servers to run them. The installation of upgrades and patches is done on the server end, so you and your IT staff don’t need to worry about keeping the software up to date. And, cloud applications can be accessed using a tablet, laptop or smartphone. Furthermore, your records are kept secure at a data center far from the physical location of your business; this ensures their safety in the event of a local disaster or other destructive event.
Another twist on cloud accounting: Some cloud-based business management softwares (like LivePlan) are integrated with accounting software (like QuickBooks). So if the ability to access your financial information from anywhere with an internet connection (rather than only being able to see it in your office) is appealing to you, look into cloud-based business applications that offer integration with the accounting software you prefer.
3. Keep your budget in mind
There is business accounting software available to suit all budgets. General applications for a broader user base may be downloaded free or bought off the shelf at a lower price.
However, the more specialized the software is, the more expensive it gets, because the user base for specialized software is usually relatively small. If you want something specific to your industry or customized for your company, you should be prepared to pay a premium.
4. Pay attention to add-on features
Add-ons bring extra functionality to a business accounting application. For example, they may allow you to access the software remotely, accept payments online, and integrate the accounting software with your ecommerce software. There are also add-ons that make accounting software compatible with tax software.
5. Make the decision with the help of your accountant
Your accountant may prefer that you choose an application that is compatible with the ones she uses. Every business is different; your accountant is in the best position to offer an educated opinion about which one is best choice for your particular enterprise. Your accountant may even be able to help you set up the software you choose.
Whichever business accounting software you choose, remember that you aren’t committed to it for life, since most software allows for some form of conversion. Still, the decision shouldn’t be made lightly. You definitely don’t want to make a commitment to one application and begin investing time into it, only to discover that you have to switch to another one just a few months later.
Choosing Small Business Accounting Software
1. Understand your business. What does your business do and what features do you really need to track all of your accounting processes. If you’re in retail, construction, or some other industry that has specific requirements for accounting, then you may be able to find an industry-specific solution, or even purchase add-ons for systems such as QuickBooks.
2. Do you need your small business accounting software to integrate with other business platforms? Are you using a CRM, ERP, POS, or some other system? If so, then you’ll want to find a system that integrates with those so you can simplify your business management. If you aren’t using those, but are planning to, then you may be able to find a more robust solution for your accounting that includes CRM or full enterprise management.
3. How much are you willing to spend? You can find accounting software at different prices, but obviously you’ll have a set number in mind that you’ll want to spend. Don’t buy into all the hype and purchase a large scale enterprise platform unless you really need it. Most small businesses can get buy with systems like QuickBooks , Xero or Sage Peachtree. Don’t invest in a large-scale solution like NetSuite or Oracle unless you have a complex business with several employees.
4. Don’t be afraid to go to the cloud. In today’s world, most software companies have starting taking their platforms to the cloud. Cloud and online accounting software packages will often have a pay as you go model that lets you pay a small monthly fee, and enables you to access the system anytime, anywhere. Additionally, using a cloud or online accounting system provides you with increased security from losing all of your data from theft or computer crashes.
5. Talk to business and software consultants. Just because you think you know the platform you want to use, does mean you shouldn’t look at other options available. Look around and talk to various vendors just to get an idea of what the different packages offer. Who knows, you may end up stumbling on a solution that better meets your business needs.
6. Create your feature wish list and take demos. Figure out exactly what features you need and create a list, after talking with different accounting vendors and seeing different platforms in action, you’ll have a much clearer understanding of which accounting system will be best for your business.
At some time during their small business life cycle, virtually every organization collects accounting information and makes decisions on how to collect and capture data. Whether it is to help determine pricing, plan a product launch, or make year-end tax decisions, developing an effective accounting system is an essential milestone. The right system will help ensure optimal business performance and better decision making. Selecting small business accounting software that best fits your needs can be a challenge. This article examines the different types of software available and what factors should be considered when selecting an accounting system appropriate for your business.