Every business needs to keep accurate financial records. For some freelancers, a notebook or spreadsheet might suffice. But accounting software can provide wider benefits. It improves accuracy, allows you to save time and money during tax season and speeds up business processes.
There are a number of accounting software platforms, so how do you select the right one for your business? Below are five features to look for when choosing accounting software, as well as suggestions for platforms that fit the bill.
1. Ease of use
Some accounting software is designed with non-accountants in mind, while others assume users have a working knowledge of debits and credits. Will you be able to simply start using the software? Fully-functional accounting software may not be something you can pick up on the fly, so if you choose a more robust platform, make sure it comes with adequate training.
FreshBooks is designed for users with little to no previous bookkeeping experience. If you do need help getting started, the company offers free tutorials, and live customer support via phone or email.
2. Cloud-based platform
Today, most of the top accounting systems are cloud-based so you can access your financial data anytime, anywhere from a computer or mobile device. A cloud-based solution ensures you won’t have to worry about updates and backing up your work. It also makes it easier to collaborate with others, including remote employees, contractors, and your accountant or tax preparer.
QuickBooks Online has a reputation for being the go-to accounting software for small businesses. It’s easy to use and can be used by nearly any size business, from a self-employed individual to established companies that need to track inventory and time.
3. Capacity to grow with your business
Some software limits the number of users or customers you can manage in your account. Other platforms may lack advanced features that you don’t need now, but will later. Look for software that can grow with your business, or at least makes it easy to export your data if you need to switch providers down the road.
Sage has accounting solutions for just about every business size or type. At one end of the spectrum is Sage Business Cloud Accounting Start for entry-level freelancers and sole proprietors who just need to track invoices and expenses. At the other end is Sage Business Cloud Enterprise Management, a robust financial management platform for monitoring a companies finances, supply chain and production management. They also offer a number of different solutions for businesses somewhere in the middle.
4. Compatible with what your accountant uses
If you work with an accountant or tax preparer, it’s a good idea to consult that expert before you select an accounting software solution. Your accountant may recommend software that works with programs they have and help you set up your chart of accounts to gather the data they need to help you file your taxes.
When you choose an accounting package designed to facilitate collaboration with your accountant, you can give your accountant access to relevant data within the system – saving you time preparing reports and answering questions at tax time. Otherwise, you’ll just need to deliver all necessary data and files to them.
Quickbooks Online dominates in this category as well. There are over 200,000 QuickBooks ProAdvisor accountants worldwide who are trained and certified to set up and support clients using their accounting software. If you don’t yet have an accountant, you can locate one using their Find an Accountant tool.
5. Integrates with other systems
Many accounting software applications have add-ons, such as payment processing, payroll services, and expense report management. These add-ons typically come with a cost, but it’s convenient to integrate with programs and services you already use and automatically share data between systems in real time.
Xero cloud-based accounting software allows you to share access with your accountant and customize your experience with over 700 apps that connect with Xero. You can search their app marketplace by function or business type.
Accounting software is not “one size fits all” and selecting the right platform can be intimidating for new small business owners and exhausting for more seasoned entrepreneurs. Research your options and take advantage of free trials and demos to test what works for you.