How to Choose the Right Accounting Software for Your Small Business

There are lots of accounting software options available on the market, and accounting software packages vary significantly in price. So how do you know which will be the best solution for your small business?

The first thing to bear in mind is that accounting software is not all the same, so even if you are only spending a modest amount of money on finance software, it is worth taking time to do some research. Here are some tips to help you choose the best accounting software for your small business.

Decide How Much You Want to Spend

Most small business accounting solutions are now cloud-based. The pricing model is usually a monthly subscription. The price that you pay will be determined by factors such as the functionality that you need and the number of users you will have on the system. Some packages also price based on transaction volumes.

The cost of a cloud-based, small-business accounting solution typically ranges from $10 to $50 per month. There are usually discounts available if you pay a full year’s subscription in advance. 

If you are running a large business, the cost of an accounting package will be significantly higher. Mid-range accounting packages can cost tens of thousands of dollars, and Enterprise Resource Planning (ERP) systems may cost you even more.

Consider the Core Functionality that You Will Need

All the well-known accounting software solutions will have the core accounting functionality covered, so you can pretty much take for granted that a package will have a general ledger, accounts payable, and accounts receivable. However, other features will vary with different software packages. Features such as foreign currency, inventory, and project costing, for example, may not exist or might be an optional module.

Make a list of the functionality that you will require in an accounting system. Then use your list of features to create a shortlist of packages that will be suitable for your needs.

Look at What Specific Functionality Your Business Needs

Accounting software can do much more than keep your books in order. The right accounting software will also save you time.

Look at the accounting functions in your business that could be automated. Would you save time if your accounting software had a recurring billing feature, for example? Would automatic inventory reordering save you some time? If you raise quotes for your customers, then a system that can create quotations and turn them into sales invoices might be useful.

Ask your Accountant

It would be a good idea to ask your accountant for their advice when you are choosing accounting software for your business. Your accountant may have other customers in similar lines of businesses to your own, so he or she may be able to recommend software for you.

Your accountant may also have experience with some of the accounting packages that you are considering. If your accountant is familiar with a system, it will make auditing your books a more straightforward job for your accountant, and therefore possibly cheaper. Your accountant may also be able to provide you with software support for your accounting system as well.

Consider Scalability

If you are anticipating significant growth in your business, then it would be wise to buy an accounting system that can grow with your business. An increase in the size of your business will likely mean higher volumes of data and the need for more users using the software.

When you are thinking about scalability, think about functionality as well. If there is a possibility that you might expand into overseas markets, for example, you may need foreign currency features in the future. Your sales order processing might be manageable on a spreadsheet now, but will that still be the case if your business expands?

The expansion of your business will be much more manageable if your accounting software has an upgrade path. Switching from one accounting package to another will be much more costly and time-consuming than upgrading an existing system.

Ease of Use vs. Flexibility

There is always a degree of trade-off in any software application between ease of use and flexibility. The easiest to use accounting software packages will have a standard chart of accounts, for example, and wizards that will prompt you through the completion of tasks.

Extremely easy to use accounting packages will suit straightforward trading businesses. Wizards and automated procedures will also make the software more straightforward for a non-accountant to use. However, you will usually find that the easy to use packages are much more difficult to tailor precisely to your own needs.

Industry-Specific Requirements

If you operate in a standard business sector, then an off-the-shelf accounting package will likely meet your needs. However, if you have industry-specific requirements, such as serial number tracking or special reporting requirements, a standard accounting package may not suffice. You may need an industry-specific accounting software package that is designed to meet the needs of that industry.

Conclusion

To summarize, the main factors to consider when selecting accounting software are the price, features, usability, and scalability. And remember, while accounting systems may all look alike, they can vary significantly in functionality. The right accounting package will be a tool that will help you run your business. So, it is well worth your while taking your time choosing the best accounting software solution for your business.