How to Choose Right Accounting Software for Your Business.
Few years back, accounting meant to recording bank transactions to get basic financial statements ready (i.e., Profit & Loss and Balance Sheet). Nowadays, accounting software's can do a lot more and hence choosing the right one is a lot confusing for new business owners.
As a business owner selecting the right software is very important step as now accounting software can deliver a lot more than financials for year-end tax filing. Accounting software can help you track accounts payable and receivable, forecasting and budgeting, inventory management, sales tax filing, payroll processing and a lot more.
But choosing the best accounting software is challenging as they vary in features, size and offer multiple price plans. Here are 5 tips to help you choose right software that works for you and your business:
1. Size of your business
The best point to start searching for accounting software is to look at your business and see which software serves your purpose. Your needs from accounting software would be different if your business is making million dollars a year than a business making $50,000 a year. You have multiple options in each of the above case. There are software designed specifically for small and medium size business and there are ERP software fulfilling needs of large business.
Choosing the right software is important as it will have a direct impact on your business financial health. If you are a small business owner or a start-up with very few transactions, you can choose free accounting software or you can get a free Excel/ G-sheet template to keep a record of your transactions.
2. Software best for your industry
You might want to consider the software that is specializing in your industry. For example, there are applications specially designed for real estate developers and rental house property management firm such as Buildium, and AppFolio.
Doing research is important as even though the accounting software can make bookkeeping easier, you still might require help from a Bookkeeper or CPA for the year end journal entries.
3. Add-on features
Choosing software based on cost and size of your business is not the only step. You should also look at what additional feature it is offering. Every accounting software have multiple plans each with different set of features. Some software limits the number of transactions you can process each month in starter plan while few offers limited features in starter plans.
Once you have narrowed down the options to 2-3 software compare the plans and feature, they offer and choose the one providing most value for your business. Most of the software offer a free trial period, make use of this, and play around with a demo company and check out if they can handle what you require in your business.
4. Software Integrations
In today’s world full of data, there are various 3rd party apps and software which can automate your bookkeeping process and save your time. Each accounting software has their own app marketplace where you can check out if you CRM or Payroll Processing partner can be integrated with your accounting software or not.
You might be a small business owner with only couple of transactions in a year. However, this doesn’t mean that it’s going to stay the same. You might want to check if your current accounting software can handle all your needs if your business grows exponentially.
If you think that you would switch to another accounting software once you grow your business and save some bucks on software cost right now then, you might want to think that through as you are missing the fact that migrating your data from one software to another may cost a lot more than you are saving right now.