6 Factors to Consider When Selecting Accounting Software for Your Small Business

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Managing the books for your small business is not a task you should take lightly. Good bookkeeping leads to good financial decisions. Bad bookkeeping can cause major oversights that can cost you your business. That’s why it’s so important that you use accounting software that makes it easy for you to see your business’s strengths and weaknesses. A written-out ledger or Excel spreadsheet just doesn’t cut it anymore.

Only a few years ago, accounting applications lived on the desktop of the small business owner or their accountant’s computer. The books were not accessible from another location and only one person could view them at a time. Then cloud computing took off and small business accounting software providers caught on.

Today, financial information can be securely accessed anywhere, anytime, from any computer or mobile device.

There are a number of options on the market and it can be overwhelming choosing the best one for you. However, the factors outlined below apply to the majority of small business owners and should be considered when shopping for an online accounting program.

1. Ease of use

User-friendly online accounting software presents you with a straightforward dashboard that provides a snapshot of your company’s financial health immediately upon logging in. The dashboard even highlights your key accounts so you can quickly gain insight into how your business is performing.

You should then be able to drill into the dashboard and perform basic accounting functions with only a few clicks. There is no need to spend valuable time customizing an invoice for a specific client or to get caught off-guard by a suddenly-due bill. Your software should simplify your bookkeeping so you can quickly perform essential tasks.

2. Integrates with other tools

Every business is unique and uses a plethora of tools to keep things running smoothly. It’s likely that you use different applications to manage your various business operations (perhaps an e-commerce platform, a CRM system, or job tracking). Seek out accounting software that integrates with your other business management applications.

Also, keep in mind that as your business succeeds and grows you may adopt other tools to handle the increased workload. In general, the more flexible your software is, the better.

3. Connects to your bank

Perhaps even more important than integrating with your CRM or job tracking platform is having the ability to connect your books with your bank. In the old days, you would have to manually enter bank transactions into your desktop software, but the cloud-based applications of today does this for you. Bank, credit card, and PayPal statements can be fed directly into your accounting software. All you have to do is match and reconcile bank transactions against accounting transactions. This process is much more accurate and efficient than the old-fashioned method.

4. Protects your data

When your financial data is stored in the cloud, there is no longer the possibility of vital information being lost in the event of a hard drive crash, power surge, or coffee spill. The data is backed up on external servers for you. Backup frequency varies among providers, so be sure to factor it into your decision.

With cloud-based software comes the threat of your data falling victim to malicious activity. Online banking has set a standard for security, so make sure your software meets or exceeds this standard. That means Secure Socket Layer (SSL) encryption, multi-layered firewall server protection, and routine external audits and inspection.

5. Customer Support

The ability to connect with an employee, other users, and experts is essential when learning any new software. The answer to your question will not always be in the manual or on the resources section of a website.

Software providers with large customer bases often have online communities, made up of users interacting with each other. These communities are normally monitored by employees, who chime in on discussions when necessary.

If you really want to become a bookkeeping master, you can opt for software that offers extensive training, such as video tutorials and webinars.

6. Price

Free options do exist but they come with a price, usually in terms of the number of features available. Subscribing to a SaaS accounting provider for a monthly fee is a good fit for most small businesses. These companies often offer a free trial, which is a great way to determine the best option for your small business.

Using the factors outlined, you should be able to find an accounting application that fits the specific needs of your business and makes your regular accounting tasks simple and accessible. Hopefully, your selection will give you great insight into your company’s financial situation and empower you to make sound, profitable business decisions.

Image: iStockphoto

About The Author

Dave Anderson is an Outreach Coordinator for Xero, an accounting software provider for small businesses and personal finance. He lives in San Francisco and writes about the intersection of business and technology. You can connect with Dave on LinkedIn.