How to Choose the Right Accounting Software for Your Business | Guide

How to Choose the Right Accounting Software for Your Business

Are you thinking about buying accounting software for the first time? Or, do you want to change software providers? With so many options available, selecting accounting software can be difficult. You need to know how to choose the right software for your business.

How to choose the right accounting software for your business

Choosing accounting software is complicated. There are many features and price points to consider, not to mention the specific needs of your company. To sort through your options, consider the following four points.

#1. Choosing accounting software starts with your budget.

Before choosing accounting software, keep in mind that the cost of accounting software can range dramatically. The amount is often determined by the number of features the software provides. The more features within the program, the more it costs.

It’s important to understand how the price compares to available features when choosing accounting software. You do not want to buy overpriced software or waste money on features you will not use. Find out if the software offers a free trial or demo before purchasing. That way, you know exactly what features you’re getting before you commit to the software.

Patriot offers a free 30-day trial for accounting software, so you can complete your books for a whole month without paying a dime.

Accounting software companies have different methods for charging users. Some software applications are sold at a large, upfront fee. Depending on the software, you might have to pay additional expenses for updates.

With other programs, you pay a monthly fee. They are often sold in packages with a tiered pricing structure. If you choose software that charges a monthly fee, know the terms before subscribing.

Some companies require you to sign up for a certain length of time, while others allow you to cancel whenever. If you break a contract, you could be charged a fee with some software programs.

Check for additional fees associated with the software. Some companies charge extra for creating invoices, running reports, and providing setup, customer service, and data storage. The software might also offer services that you can add on.

#2. The best software for business accounting is the one you know how to use.

If you’re like many small business owners, you have a depth of knowledge in your field, not accounting. Dedicating time to learning bookkeeping is not how you want to spend your workweek. Keep in mind how much you will need to learn in order to use the software you select.

You’re not a bookkeeper. But, the fact is, you already have experience in money management. Do you keep track of your personal checking account? How about the bills you pay each month? You’ve been managing your personal funds since you began earning money.

The best software for business accounting will be a program that helps you keep track of your business’s money in a similar way to personal funds. You record your business’s transactions as money flows in and out of the company. A user-friendly software solution helps you make smart financial decisions.

That said, accounting software is available with different skill levels in mind. Some software systems are simple and made for the nonaccountant. Others are more suited for financial professionals. Many types of accounting software packages offer free resources and customer support to help you.

Consider the amount of time you want to invest in understanding the software. If the learning curve is too steep, you could end up wasting time and resources figuring out how to use the program.

#3. Decide the features you need for accounting software.

Many factors go into determining which features you need for accounting software. Consider the time commitment and skill level you will commit to the software. If you work with an accountant often, the accountant may need you to use software with certain features. Your business’s size, industry, and recordkeeping requirements also play a part in choosing software.

Accounting software applications come in all shapes and sizes. Though there are many features available, a recent Software Advice report revealed that accounting software buyers most often request financial reporting (82%) and billing and invoicing (52%) features.

Here are some common features you might come across:

  • Create and track invoices
  • Pay vendors
  • Compile financial statements
  • Process credit cards
  • Integrate with bank accounts
  • Record customer histories

To organize your search, make an accounting software requirements checklist of all the features you need for accounting software. Prioritize the list from the most necessary features to the least. Then, decide extra features you would like to have but don’t need.

It’s important to find a software solution that supports both current needs and can scale with your company. But as a small business owner, you might not be ready to invest in a heavy-duty program.

Eileen O’Loughlin, Market Research Analyst at Software Advice, explained:

“It’s important that prospective buyers look for a solution that supports their current needs as well as what they think they’ll need two – three years into the future. Any further out may be too unpredictable.

“This doesn’t mean that businesses should invest in an overly-robust system thinking they’ll grow into it, but rather they should look for a system that offers the flexibility they’ll require as they scale within that timeframe. Why use accounting software that forces you to pay for features that just collect dust?

“Considerations should include the number of user licenses the system can support as well as potential limitations on the number of inventory items, list entries (e.g., number of employees, customers or vendors) or tracking for multiple locations/tax IDs.

“Small businesses especially should be wary of investing in a heavy-duty system that’s too robust for their needs. Instead, they should look for a system that supports their critical accounting needs first and that can integrate with other tools as needed to support secondary processes. This helps ensure that they are only paying for features they’ll actually use.

“In our 2016 analysis of accounting software buyer trends, we found that capabilities most-often requested by small businesses include core accounting, financial reporting, billing and invoicing and payroll. Most small business owners would be well served by software that supports these key elements and that can integrate with supplemental accounting tools as needed.”

#4. On-the-go owners must look for flexibility in an accounting software selection.

Your accounting software selection will largely depend on how mobile of a business owner you are. If you spend your workday in multiple places, consider cloud-based accounting software.

Your accounting software selection will largely depend on how mobile of a business owner you are. If you spend your workday in multiple places, consider cloud-based accounting software.

Cloud software stores information online. You can access the program from any device with an internet connection. You do not have to use a single computer to do all your accounting for small business. If your computer crashes, your information is safe and can be accessed on another device.

You might consider desktop software if you tend to work closely with one computer throughout the day. Desktop software is installed directly on your computer. The information is stored on your hard drive. If your computer crashes, you risk losing information. You can only access the software from the computer you install it on.

Depending on your business, you might need to share your financial information with others. For example, if you have a partner, you both need to be able to see the business’s books. Some programs make report sharing easy by allowing multiple users on an account.

Report sharing also comes in handy if you find an accountant to work with. The accountant can access your books with a separate login. Information can be exchanged without downloading documents, sending faxes, or physically meeting up.

How to choose accounting software

The items listed above are just a starting point. You also need to consider:

  • How to choose accounting software that protects your information.
  • A list of accounting software programs that work within your company.
  • An accounting software evaluation checklist to reinforce your decision.
  • The typical customer choosing accounting software programs you’re considering.
  • Factors to consider when choosing accounting software for your bookkeeping method.
  • The importance of accounting software in business that complies with government laws.
Download our free guide, 10 Things to Consider When Choosing Accounting Software, to learn more about which accounting software option is best for your business.

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