Accounting software is an important tool for nearly every business because it records transactions, generates invoices and reports, and many programs automate repetitive tasks such as emailing payment reminders. Even if you have an accountant on staff, accounting software can save you time and money by streamlining processes like bank reconciliation. In addition, most accounting software solutions include features that track billable time and expenses, manage contacts, and in some cases, handle inventory and payroll.
With so many solutions on the market, it can be difficult to figure out which software will be the best fit for your business, and because accounting software is key to your business operations, price alone shouldn't determine which one you buy. Read on for tips that can help you choose the best accounting software for your business.
How to Choose the Best Accounting Software for Your Small Business
It's tempting to go with the first accounting software you hear about because it's popular or a peer likes it, but there are multiple solutions on the market for a reason, and finding one that fits your business can save you time and frustration.
Each accounting system has unique advantages, with features that favor certain types of businesses. Some are better suited for businesses with sales teams, for example, because they calculate commissions. Others offer features needed by service-based businesses, such as recurring billing that automatically invoices your clients for regularly scheduled services or subscriptions.
In addition to choosing accounting software that has the feature set you need, it's important to consider whether it connects with your bank and integrates with other business systems or services that you already have in place and aren't looking to upgrade, such as payroll or payment processing.
If you're currently using desktop accounting software, you may want to consider switching to an online system that offers enhanced security, automatic backups, regular updates and the convenience of accessing your account from any computer with internet access.
If you need a list of programs to consider in your search, check out our reviews of the best accounting software. Below are six steps you can take to ensure the accounting software you choose is the best fit for your small business.
- Check for compatibility with your current software. In this world of compatibility, there's no reason to buy an accounting program that doesn't play well with others. Look for software that integrates with your current business software so that actions taken within one application are accurately recorded on both programs. For example, if you have an online store, you want accounting software that integrates with your eCommerce shopping cart so sales are automatically calculated into your profits and the purchased items are subtracted from inventory.
- Make note of special needs of your business. What do you need your accounting software to do? Think about business processes that could be simplified with accounting software. For example, do your employees work on commission? Do you have an online subscription service? Do you have physical inventory you need to track? Do you need to track billable hours among multiple clients? Do you need to print checks or email PDF invoices?
- Get Recommendations. Ask people you trust who are in a similar business what they use. If you have an accountant, ask what programs he or she prefers. Check with your network of fellow business owners for recommendations. Be sure to ask why someone prefers a program. People select different programs based on their individual needs – find the ones that match yours. Unless you find a program that you're immediately comfortable with and that meets your needs, aim to research at least three contenders. Start with our Top Ten list; we've researched, tested and reviewed accounting software for years and recommend the 10 best programs on the market.
- Check out the products' websites. Once you've narrowed your list to a few top contenders, go to their websites and check the features, pricing and plans. Explore the support section and look through FAQs, user guides and demo videos. These resources can help you determine how easy the program will be to use and how much help you can get if you purchase the program and run into a snag.
- Call or email the company and ask questions. Websites don't always have complete information. Don't assume Software X can work with your shopping cart software just because it says "compatible with most." Call or email the company to verify that it works with your specific systems. Also ask about industry-specific needs and financial regulations specific to your business, whether the software can be customized, how easy it is to import your existing records, and how easy it is to upgrade or downgrade plans. Be sure to inquire about technical support, especially if you're not comfortable with accounting software, integrating systems or are new to business.
- Get the trial version. It can be time-consuming to thoroughly try out several accounting programs, but in the long run, it's an important step. It gives you hands-on experience with a program, helping you determine whether it's the right fit for your business. Most online accounting software services offer a 15- or 30-day trial, and most include a full range of features, even if features vary by pricing tier. Use this time to test out the features so you can determine which program you like best and which tier you need.
What Features Does Your Business Need?
More isn't always better. Sometimes, extra features in a program can make it more complex to use or more expensive. Why pay for bells and whistles you don't want? You may find that a basic program or a lower tier of a more complex program includes the features you need at a lower price.
Below, we list accounting software features that may be useful for small businesses and solopreneurs. You can use this list as a reference as you consider which features you need to look for when purchasing accounting software.
- Manages Customers
- Tracks Expenses & Billable Time
- Accepts Payments Online
- Manages Fixed Assets
- Tracks & Pays Bills
- Runs Financial Reports
- Bank Feed
- Manages Vendors
- Creates & Sends Invoices
- Automatic Payment Reminders
- Creates Purchase Orders & Manages Inventory
- Creates & Sends Quotes or Estimates
- Recurring Billing
- Supports Multiple Businesses
- eCommerce Compatible
- Payroll & HR
- Invoices by Project/Job
No matter what your business's industry or size, the accounting software you choose should have bank-grade security and basic accounts receivable and accounts payable features. You should be able to manage contact information for your customers and vendors, create invoices, and track bills and expenses. It should connect with your bank and automatically download transactions, saving you the hassle of manually importing data.
Most online accounting software solutions offer multiple plans. Some pricing tiers are based on the number of users or employees, but many premium plans offer additional features. Look for the plan that best suits your business's needs. If a program you like is missing a feature you need, ask about customization through add-ons or integrations.
How Much Does Accounting Software Cost? Is It Worth It?
Most online business accounting programs run $10 to $70 or more a month. You can find some accounting software for free, but customer support may cost extra. Although this monthly expense can add up, the right accounting software pays for itself by saving you time, effort and frustration.
One of the main reasons to purchase an accounting solution is for the convenience. The best accounting programs not only track income and expenses but also automate processes like invoices or recurring payments. Some handle inventory and payroll and track information important for taxes. Several are compatible with other business software, like point-of sale (POS) solutions. Most can generate a variety of financial reports as well, making it easy to track your business's progress, share financial data with your investors or show solvency when applying for a loan. If you work with an accountant, most software allows you to grant access to the information he or she needs at no additional cost; or, if you prefer, you can export the information in a format your accountant can use.
Accounting software guards against human error, because calculations are built-in to the program, as are tax laws, financial regulations and generally accepted accounting principles (GAAP). This results not only in accurate numbers but keeps your books within the bounds of law and sound accounting practices. In the end, a good accounting software application saves you time and frustration, which translates into money through saved labor hours, and the time you save balancing your books can be spent thinking about the next big thing that can take your business to the next level.