Choosing the right accounting software for your business is one of the most crucial decisions you’ll make for your long-term success. Pick one that’s more complex than you need, and keeping your numbers up to date may be too difficult, and you could be overpaying for features you don’t need. On the other hand, if you choose one that’s too basic, you might not have the functions you need to stay on top of your numbers. With the right system, you’ll always know where you stand and you’ll have the information you need to make better decisions.
Let’s take a look at the factors you should consider when choosing accounting software for your business.
Where Are You Now and Where Are You Headed?
A solo entrepreneur who wants to remain a one-person operation will have different needs than a tech startup founder with dreams of eventually going public. For a solo entrepreneur, getting paid quickly and easily is a priority, so you’ll want a program that includes easy invoicing clients and integrated ways for clients to pay you. A very basic program like Wave, FreshBooks, or Zoho might be all you will ever need.
But a tech company will eventually need software with advanced reporting capabilities to keep investors and lenders happy. Eventually you’ll need an enterprise-level solution such as Netsuite or Intacct. Getting started with a simpler — and less expensive — option such as QuickBooks Online or Xero is always an option, but eventually you’ll have to make the move up, which may mean a difficult conversion process.
How Much Do You Know About Accounting?
Some accounting software is super easy to use, and doesn’t require much prior knowledge to use it successfully. But other options expect that you know at least the basics of accounting, if not more. While small business owners don’t need a degree in accounting to understand their financials, taking the time to learn the basics will serve you well in the long run.
If your software is too hard or too confusing for you to use, you’ll be less likely to keep it up to date, which is almost as bad as not having any software at all. Fortunately, most accounting software comes with a free trial period, so you can take it for a spin to see if it will work for you.
Cloud or Desktop?
This really isn’t that much of a consideration these days because most accounting software is in the cloud, or has options for accessing it in the cloud. Cloud accounting software means you can perform accounting functions such as invoicing clients or retrieving data from almost any device, from anywhere in the world, as long as you have an internet connection. This can be especially valuable for entrepreneurs who work on the go.
Cloud accounting software can import transactions directly from your bank or credit card accounts so your numbers are updated automatically, in real time, with very little effort on your part. Even account reconciliation can be done easily.
Because accounting data is confidential, make sure that the provider uses encryption and ask about their security protocols. Programs that require two-factor authentication will give you better security.
Overall, keeping your data in the cloud is more secure than on a server in your office. Desktop computers or servers leave your data vulnerable to loss from theft, fire, floods, or other disasters. Cloud software is always updated to the most current version, so you don’t have to worry about missing a crucial security patch update.
What Functions Do You Need?
Besides tracking income and expenses, and creating basic financial statements, you may need additional functionality in your accounting system. Online sellers and manufacturers need robust inventory management, while a nonprofit organization needs something that can handle fund accounting. Here are some functions to consider as you evaluate options:
- Budgeting
- Payroll
- Sales tracking
- Inventory
- Ability to accept credit card payments
- Customer information management
- Estimates
- Invoicing
- Job costing
- Project management
- Cash flow projection
- Time tracking
As you evaluate options, consider which options are must-have and which are just nice-to-have. Sometimes an add-on app can provide you with the missing functionality at a lower cost.
Is There an Industry-Specific Option?
While all accounting software tracks basically the same things — income, expenses, assets, and liabilities — the day-to-day flow of cash can differ quite a bit between different industries. An all-in-one solution may lack some of the features you need to keep your business running smoothly and to correctly track your income. Adding industry-specific apps can help, but you may be better served by choosing software tailored for your industry. For example, construction companies may need project management capabilities, while SaaS companies will need revenue recognition modules.
What’s Your Budget?
If you’ve been keeping your books with Excel or using the shoebox method, paying anything at all for bookkeeping may feel like an unnecessary cost. Fortunately, there are some very basic free options that can at least get you started, and help with the basics of invoicing and keeping your income and expenses organized. However, even those “free” options come with costs: most charge a transaction fee when customers pay you online, and they may lack functions that you need.
Does Your Accountant Have a Preference?
Working with an accountant is invaluable for ensuring you’re not paying more taxes than you need to, and to get business advice to help you grow and thrive. Some accountants are happy to work with any accounting software, while others have developed optimized processes and procedures for just one software platform. Before you make a final choice, be sure to run it by your accountant. They may even offer you a discount if you purchase your software through them.
What Level of Support Is Available?
No matter how skilled you are at accounting or how easy the program is to use, at some point you will need support. Things break and connections fail. Your “free” option may become costly if customer support is lacking or non-existent. Some vendors have an add-on support option for a fee, which can provide an extra measure of reassurance.
Be sure to check out the options available on the support page for software you’re seriously considering. Is there a good list of FAQs? What about educational materials or how-to videos? Do they have a toll-free number so you can talk to a person, or is support limited to email or chatbots?
A quick way to check out how happy customers are is to search online for complaints about that software program. A flood of complaints about support or sudden changes in the program is a big red flag.
Choose Wisely
The best choice for your business will be a program that fits your budget, provides you with the functionality you need, is easy to use, keeps your accountant happy, and helps you make better decisions for your business.