How to Choose Accounting Software for a Small Business
Do you keep all your accounting and bookkeeping in an Excel spreadsheet? Or worse, a shoe box full of receipts? Did you sign up for a free or low-cost bookkeeping app based on budget alone but have since realized you need a more robust solution?
One of the cornerstones of streamlined, accurate and useful financial information is having the right small business accounting software. But with an overwhelming number of options available, how do you make the right choice?
Let’s explore how small business owners can select the perfect accounting software.
Step 1: Assess your business needs and consider must-have features
Before selecting accounting software, you first need to assess your business needs. Consider the size of your business, your growth goals, the complexity of your financial transactions, the level of accounting experience within your team, required integrations with other tools or apps you use, and necessary features in your industry.
Every reputable solution should have similar base accounting features: they can all help you send invoices, track accounts payable and receivables, handle expense tracking, and generate basic financial statements. But what else do you need?
For example:
If your business depends on inventory, you want a solution to help manage inventory, integrate with your inventory management system, and support sales tax compliance.
You might need job costing capabilities if you’re in the construction sector.
You may want accounting software that integrates with your customer relationship management (CRM) software, human resources information system (HRIS), point-of-sale system, or payroll provider.
If you have locations or customers in other countries, your software needs multi-currency support.
If you have employees, you may need time tracking or features.
If you drive your personal vehicle for business, mileage tracking features can make that process easier.
You may want features that can help you run and grow your business, such as cash flow forecasting.
Understanding your specific requirements sets the stage for a more informed decision.
Step 2: Consider your budget
Budget plays a pivotal role in any accounting software decision. While looking for free accounting software or the cheapest option is tempting, remember that you get what you pay for. Investing in a slightly more expensive option that meets all your needs can save money in the long run by reducing the need for additional tools or services.
On the other hand, you don’t want to choose pricey software and pay for a bunch of bells and whistles you’ll never use.
Keep in mind any hidden fees or costs. For example, the base plan for some software might allow only one user, only connect to one sales channel, or connect to a limited number of business bank accounts. If you need multiple people to access the system or connect to various e-commerce platforms, you might need to pay an additional monthly or upgrade to a more expensive plan.
At Slate Accounting + Technology, all our clients are on Xero and Intacct. Both offer a range of pricing plans to suit different budgets and an extensive set of features and are highly customizable.
Step 3: Evaluate security and cloud capabilities
In an age when data breaches are prevalent, security is essential. Ensure that the accounting software you choose adheres to industry-standard security practices, including data encryption, redundancies so you don’t lose your data, and requiring two-factor authentication.
Cloud capabilities are equally important, as they allow you and your team to access financial data from anywhere and support collaboration with your accountant and tax preparer.
Step 4: Check out reviews and recommendations
The software provider’s website can provide a wealth of information about pricing and features. But don’t just take their word for it—look for third-party reviews and testimonials from other businesses in your industry.
For example, when searching for “Xero reviews” on Google, you’ll find helpful reviews from sites like NerdWallet, G2, PC Magazine, and TrustRadius. Pay attention to comments about the software’s ease of use, customer support, and any limitations users encounter.
It’s also a good idea to ask for recommendations from your network. Your accountant likely has firsthand experience with several software solutions, and peers in your industry can provide valuable insights.
It’s a bonus if the software has won any awards or recognitions for customer service. You should be able to find these on the company’s website or by searching online.
Step 5: Take it for a spin
By now, you’ve narrowed your list of options to a few solutions with the right mix of pricing, features, and excellent reviews. It’s time to take them for a spin.
Every reputable accounting software provider offers a demo, trial, or money-back guarantee. This hands-on experience lets you see the software in action and assess whether it aligns with your business processes and needs.
Pay particular attention to the user interface. Is it intuitive and easy to navigate? Ensure you can perform your daily tasks efficiently and that it integrates seamlessly with other tools you use.
Also, consider whether the solution provider offers in-person training, a video library, or other educational resources like webinars and user guides to help you get up to speed quickly and help onboard new employees who will use the system in the future.
Final Step: Make your decision
Once you’ve assessed your business needs, considered must-have features, set a budget, evaluated security and cloud capabilities, checked out reviews and recommendations and done a few demos, you’re ready to make an informed choice on the best accounting software for you.
Here at Slate, we recommend Xero and Intacct. Both are excellent options that cater to different business sizes and needs. But if you’re still unsure about which accounting software is right for your business or need help setting up your accounting processes to align with your business objectives, contact Slate. Our team is happy to help you navigate the landscape of accounting software options and select a solution that fits your needs now and can scale with your small business.