Key factors to consider when choosing accounting software for a small business

There are plenty of accounting software packages that are suitable for small businesses. And, at first glance, all these packages appear to have the same functionality. So, how do you decide which accounting software will be the best for your business? Don’t jump straight in and buy the first accounting software package you see with a name that you recognize. Cast your eyes down this list of factors to consider first. Here are twelve things to think about when you are looking for accounting software for a small business.

1. General Functionality

Begin your search by writing down a list of the core functionality that you will need. Will you want to raise purchase orders, for example? Will you be holding a stock of raw materials, parts, or finished products? All good accounting systems will help you maintain basic accounting records. They can, though, vary a lot in other types of functionality.

2. Industry-Specific Functionality

Some types of businesses have specific requirements. A website developer might need project costing to track the profitability of projects. An eCommerce business might need accounting software that integrates with eCommerce software. So, don’t restrict your search to only the well-known, general accounting packages. It will also be worthwhile searching online for industry-specific packages.

3. Multicurrency Functionality

If you often post transactions in other currencies, you will need multicurrency functionality. This will allow you to post transactions in both the foreign currency and in your home currency. If you hold assets and liabilities in other currencies, you will also need to be able to perform currency revaluations. Foreign currency functionality is often not available in standard small business accounting systems. So, if you do use a lot of different currencies, make sure that the software you buy has multicurrency functionality.

4. Cloud or Desktop?

Cloud-based accounting software is becoming the norm. It offers easy access to your accounting system wherever you are. It also allows you to give other people access to your accounts as well, such as a bookkeeper or your accountant. The drawback of cloud-based software is that you need internet access. So, no internet access, no access to your accounts. That’s worth bearing in mind if your internet connection is unreliable.

5. Bank Compatibility

Most of the best accounting packages will allow integration with your bank. This integration will allow you to download transactions from your bank. Then, you will be able to complete your bank reconciliations. If you automate your bank reconciliations in this way, it will save you a lot of time. To be able to do this, though, your accounting software will need to be compatible with your bank’s software.

6. Scalability

If you expect your business to grow, you will need an accounting system that can grow with it. Business growth will lead to an increase in the volume of transactions. It will also lead to the need for a multi-user accounting system. Higher volumes of transactions may also justify the use of more extra software functionality. So, it is a good idea to check what upgrades you will need to be able to cope with the future expansion of your business. And, you should also check how much those upgrades are going to cost.

7. User Security Options

If you are planning on major growth in your business, you will need to consider user security. You will need to be able to define what each user can see and do on your accounting system. This type of security goes far beyond simple read and write security. When you have several people using the software, you will need to have role-based security as well.

8. Ease of use

Most modern small business accounting packages are easy to use. Some, though, need more accounting and technical know-how than others. Accounting software should make your life easier, not more complicated. So, try out a demo of the software and read customer reviews before you buy an accounting package.

9. Customer Support

Customer support is a key factor when choosing any software for your business. You will need training and hand-holding when you first begin to use a new accounting system. You will need ongoing support as well. Check what type of support and training is available and check when support is available. Monday to Friday support will be no use to you if you usually update your accounts at the weekend.

10. Reporting

Check what standard reports are available with the system. Most accounting software will have a report writer. Even so, writing reports from scratch takes time. A package that includes a comprehensive suite of standard reports will save you a lot of time. You can write your own custom reports when you are more familiar with the system.

11. What Your Accountant Recommends

Ask your accountant if they recommend any accounting software. If your accountant is familiar with the software you are using, they may be able to help you configure it and use it. Familiarity will also make it easier for your accountant to find the information they need from your accounts. So, it should reduce your accountant’s fees.

12. Price

Online, cloud-based accounting software is not very expensive. It is usually available for a modest monthly license fee. The price that you pay will depend on factors such as functionality and the number of users. Some packages are also priced based on the volume of transactions. Think about what you will need in the future as well as what you need now. You can change your accounting package if you grow out of it. But it is usually much easier and cheaper to upgrade a system than it would be to replace it.

Conclusion

The main thing to take away from this article is that you should not rush the buying of accounting software. Systems such as QuickBooks, Xero, and Sage may all look alike, but they don’t all have the same functionality. If you buy the wrong accounting software, it won’t be only your money you will have wasted. You will also have wasted a lot of your own time.  And, when you are running a small business, your time is one of the most valuable finite resources that you have.

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