Small business owners, like you, face many decisions when establishing their accounting needs. In addition to that, you need to decide to invest in online accounting software for small businesses and if you want a cloud-based or desktop solution. Managing your small business requires deep knowledge of all the ins and outs of accounting and finance. So, while planning the strategies and approaches for your business operations is important, securing the best accounting software for small businesses gives you more advantages.
It is also important for you to carefully evaluate the costs of each option so that you can find the best accounting solution fitting your budget. By doing this, you will better grasp the features and functionalities that will meet your business needs in the long term. You and other small business owners can make this decision more easily by researching the best free accounting software for small businesses ranked among the most reliable ones over the years.
What Is Accounting Software?
Accounting software is a computer program designed to assist accounting professionals in recording, analyzing, and reporting financial transactions of a firm or business. In addition, accounting software has an array of useful tools such as bill payment, payroll, invoicing, and more.
Record keeping has been around for centuries, marking the beginning of trade transactions. The first accounting records were written on clay tablets back in 3300 and 2000 BCE. It was in the 13th century when medieval Europe started a money economy that trading became obsolete. Since then, merchants have counted on bookkeeping to record and oversee the multiple transactions capitalized by bank loans. As industries progressed, refining accounting procedures became a need to avoid errors, improve accuracy, and prevent losses in company profits.
Later in the 1960s, industries developed electronic data interchange (EDI) to standardize various transactions between merchants and customers. Decades passed, and the advancing technology made accounting software come to brighter light. Quickbooks was then launched in 1998, dominating the market for day-in-day-out bookkeeping. Now, over 4.5 million businesses, big and small, use Quickbooks. It has been the most popular and most successful accounting program around the globe.
Why Use Accounting Software?
Growing businesses can benefit from accounting software by using various tools, recording the company's cash flow, and enhancing inventory management. Whether you are a big-name company or a small business, having an accounting tool is a great plus to your processes.
The accounting software differs from one firm to another. Large businesses may choose to use customized, complex accounting software, while small companies often choose off-the-shelf accounting software. Regardless of the nature of your business, accounting software makes accounting calculations and financial reporting easier for accountants. In addition, accounting software helps retrieve old accounting data faster, a helpful feature for both internal and external audits.
Having a vast amount of data can be tedious to go through, which is why businesses opt for accounting software. Tracking complex transactions is only a few fill-outs and clicks away.
What to Look for When Choosing The Right Accounting Software for Your Business
One of the topmost priorities of a small business owner is to keep track of the money coming in and out. Thus, it is critical to have the most suitable accounting software for your nature of business. You will need a program to help you with your daily accounting tasks, such as recording payments, invoicing customers, tracking expenses, and reconciling transactions. Furthermore, the program can provide you with insight into your company's financial health by allowing you to generate reports that help you analyze your business performance from various perspectives.
Because of technology, accounting software improves bookkeeping and financial transactions for all businesses. Here are things you should look for when choosing the right accounting software for you:
Cloud-based or Desktop Accounting Software
Storing data online has become the norm. With the ever-evolving technology, easy access to accounting software has been made possible. So, what is cloud-based accounting software?
Cloud-based accounting software stores your data online, making it accessible anytime and anywhere. You can retrieve, add, update, or remove data from your accounts through the cloud servers, making the process easier and more efficient for everyone in the bookkeeping and finance department and the overall business in general. In addition, cloud-based accounting software allows you to add more people to have common access to your accounts, such as your company's bookkeeper or accountant.
The desktop accounting software, on the other hand, stores your data offline. This type works by directly installing the accounting software onto the accountant's personal computer at work. Hence, their access to viewing, adding, updating, and retrieving data, is only within the unit where the software is installed. Thus, no one else can access data except for the accountant or bookkeeper.
Usability
First thing you should ask— how many people should have access to the company's accounts? Find out what exactly it is your accountants need to accomplish their tasks. If you have a large number of employees in your accounting team, you should consider having accounting software that is simultaneously accessed and able to handle unlimited users. Doing so can help save time, space, and effort to retrieve or add data and submit financial reports on time.
Costs
Before purchasing the best accounting software for your small business, you must be certain about investing in it in the long term. Cloud-based accounting software is not that expensive and comes with monthly license fees. Take note that the cost of the software will vary on factors, such as the functionality packages and the number of users. Although you might grow out of the accounting package over time, especially when your business expands, it is still cheaper to upgrade the system than to have it replaced.
Reporting
The main purpose of getting an accounting software package is to check what reports are available to use. For example, some accounting software has an innovative report writing feature, which helps accountants save time and effort compared to working on it from scratch. Of course, once you familiarize the processes in the system, you can always write a custom report.
User Security
Small businesses don’t stay small forever. If you are planning on making a major step into expanding your business, you must consider user security functions. Depending on your specified users, you have to sort out who can see and do which information. This key factor is far beyond just read-and-write security. You might also want to consider role-based security if you have a wider array of people using the accounting software. If not overseen, unauthorized users might have access to crucial information, which they can divulge for their own profit or to ruin your business processes.
Functionality
Although various accounting software packages appear to have the same features, you must choose the most suitable one for your business. You also have to write down the core functionalities you need to run a smooth operation in your small business. Whether you want to raise your purchase orders, stock raw materials, or manage on-hand and incoming products, the accounting software you choose must have these features. For example, you must be keen on finding an accounting software option with features such as expense tracking, inventory tracking, invoicing, payroll, and double-entry accounting.
You must also know the industry in which your business operates. That way, you can accomplish the industry-specific requirements to keep your business operations running smoothly. For example, you might need accounting software integrated with e-commerce software if running an e-commerce business.
Perks
The features of an accounting software option may differ from that of others. Hence, you must see through the perks and advantages of the accounting software package you consider purchasing. For example, while others have unlimited invoices and financial reports, some offer less for a lower price. Furthermore, you will know what business accounting software best suits your business. Finally, considering the benefits of the accounting software you chose will make each accounting task easily executed, giving your business operations the upper hand.
Ease of Use
Above all, you should determine if the accounting software is easy to use and navigate through. By doing that, accounting transactions will only be a matter of a few moments, making it time-saving and more efficient for your accountants. Some of the lists of accounting software have a more technical touch than others.
You can try out the demo version of the accounting software you have picked and see if you are getting the processes just right before buying the software package.
List of Small Business Accounting Software
As a small business owner, you have a wide selection of accounting software options in this innovative, high-technology era. After determining what your business needs, you will know which software package to go for. Here are some of the accounting software you would want to consider buying.
- Quickbooks Pro
Quickbooks Pro is a modern accounting solution that caters to small and mid-sized customers. Its features include an easy-to-use interface, track income and expense, maximize tax deductions, manage and pay bills, and more. The price range for the monthly license fee starts from $12.50 to $90.
- Sage 50cloud
Sage 50cloud is an accounting software installed in the cloud. Sage 50cloud makes all the data files safe and accessible on the cloud at all times. Along with Sage 50cloud hosting services, all authorized users can simultaneously work on the same file and collaborate with accountants to get tasks done more efficiently. Here are the prices of each accounting software package:
- Sage 50cloud Pro Accounting: $340.00/year
- Sage 50cloud Premium Accounting: $510.00/year
- Sage 50cloud Quantum Accounting: $842.00/year
- Wave Accounting
Wave Accounting is a seamless accounting software integrated with payroll, invoicing, inventory tracking, payment processing, and receipt scanning. Aside from Wave providing free financial services to small businesses, Wave also delivers the best free accounting software and services to freelancers.
The Conclusion
The takeaway of this article is to guide you through choosing the best small business accounting software. There is no need to rush in buying accounting software, especially when you are yet to finalize your business processes. Accounting systems such as Quickbooks, Sage, and Wave may seem to look alike in terms of operations, but their functionalities differ from one to another. If you need expert bookkeeping assistance, you can contact Unloop and get started today!