What kind of accounting software should I use?
Every small business needs some form of an accounting system and these days many are opting for cloud-based software, with market leaders such as Quickbooks, Xero, MYOB and Reckon. But what are the different options? And is ‘the cloud’ all that? In this article we’ve narrowed down 5 essentials that an accounting system should provide, and why the cloud might be something to consider when looking for accounting or bookkeeping software.
5 Considerations when choosing accounting software for your small business
- Who will be using it?
When managing the finances of a small business, it’s important to consider your accounting needs, and whether a full investment in accounting software is necessary.
This will depend on the size and complexity of your business. Some business owners starting out may prefer to use a simple spreadsheet – though this can be time consuming to manage and cumbersome when it comes to tax time. Accounting software can significantly streamline your processes and create time and cost savings.
If you’re planning on using a bookkeeper, you should speak to them about what software they use or prefer to use. If you are engaging an accountant, you should also ask the same question. If it’s just you, you need to consider what is important to you and how much knowledge or experience you have using similar software.
To determine what software you need, you should create a wishlist of what you would like it to do. Many have extensive built-in functionality as well as powerful integrations with other software, such as sales management and customer management systems, point of sale and booking systems for example.
In terms of functionality, do you need to produce and track invoices and expenses?
Do you have payroll requirements? Depending on whether you will be hiring staff, you may want software that includes PAYG capabilities*, leave and entitlement tracking and integration with Superstream*. Do you have other tax or employee obligations and can an accounting system help you meet these? (*These are Australian specific examples. You should check with your local, state and country authorities to determine your tax and payroll obligations.)
Another thing to consider is whether or not the system includes a method to track stock, work-in-progress or orders.
One last point to ensure is that the software is capable of handling multiple bank accounts, and is able to collect data from your bank in particular. Several online accounting software options include real-time bank feeds, which enables easy reconciliation.
Cloud software is often praised for its efficiency, mobility and (surprisingly to some) security. When it comes the cloud, security of data is often the number one concern among small business.
You should review your software option for security measures such as data encryption and data back-ups. Disaster recovery planning is another thing to look out for in regards to security, and it is important that none of the information that will be recorded with the accounting software will be shared with third parties.
The second thing to look out for in terms of cloud software is its mobility. Is the system is available on Androids, iPhones, iPads and both PCs and Macs? Will you and your team be able to keep track of your business’ finances on the go, and from any device.
Another thing to consider when looking for cloud-based software is the quality and availability of the customer support team. Are they available via phone, email, instant chat? What hours can you contact them?
- What’s included
Finally, as a small business owner it is important to assess the billing plan of the accounting software you are selecting and consider whether the cost is consistent with your business’ needs.
You may not need all the functionality of a particular system or all of its add-ons. Check how many users, employees and transactions you may be limited to and how long you are locking in the contract for. Also check whether the software is automatically updated for no further cost and what would be involved in exporting the data out of the system if you ever decided to change.