More than you might think, the accounting software for the business you choose matters. The best software can help you keep track of critical financial information in your company, pay your employees on time, and keep track of your taxes.
The wrong software could set you back and hinder your long-term growth. You can either do the bookkeeping yourself or hire someone to do it for your company. A flexible solution is essential to help you grow.
What is accounting software?
Accounting software helps bookkeepers, accountants, and business owners manage the company’s financial transactions. The right software will make it easier to organize, track and analyze financial data.
The type of software and your business will determine the features and customizations you need. Small businesses and freelancers may be able to use a generic solution that fits all, but enterprise companies will need something more complicated.
Also read: A Detailed Guide of Accounting Software With Features & Benefits
How can accounting software help your business?
Accounting software can streamline your business processes and help you prepare for tax season. Here’s how accounting software can help you determine if your business requires it.
- Manage your business finances. Accounting software will automate your finances and eliminate human errors caused by manual data entry.
- You can access your financial information from any location as long as there is a Wi-Fi network.
Prevent data loss. Cloud-based software for accounting regularly backs you up so that you don’t have to worry about losing data. - Integrate third-party applications. Many accounting software integrates well with third-party apps such as CRM and expense tracking.
- Filing your taxes. With the right accounting software, it is easier to file your annual and quarterly taxes. The software can be used to track the number of your business’s Owings and collaborate with your accountant.
Top accounting software to consider
You’ll soon realize that there is no one “best” accounting software. However, certain accounting software types will work better for your business than others.
Basic accounting features should be included in any software that you use, such as a general ledger and account reconciliation. Let’s take a look at some other features that accounting software can offer.
Invoicing
Invoicing is an essential part of most businesses. Most accounting software has this feature. An invoice basic should include customer information, due dates, and the amount owing.
Some software also offers advanced billing features.
- You can create custom invoices with your company logo, colors, and fonts
- Multiple payment options are available, including credit cards, debit cards, PayPal, and e-checks.
- If a client is late with a payment, an automated payment reminder will be sent.
- Ability to charge customers in their native currency
- Customers who have retained agreements can set up recurring payments
Payment processing
Customers should be able to pay online using your accounting software. Customers can pay online by scanning a QR code on most invoices or clicking a button.
For customers who are returning customers, you should have the option to set up recurring monthly or weekly payments. Your software should track and reconcile payments after the customer has made them.
The software should allow you to view detailed reports on customer payments. These reports will allow you to understand the preferences of your customers and other trends in payment.
Payroll Management
Companies’ needs in running payroll are dependent on the number of employees and the benefits they offer. The software you choose should calculate how much you owe employees regardless of whether they are hourly workers or salaried.
Software should be able to manage different pay schedules, benefits, and compensation. Many employees prefer that their checks be automatically deposited into their bank accounts. Therefore, any software you choose must handle direct deposit for employees.
Software should be able to calculate taxes and generate the appropriate forms. Freelancers earning more than $600 per year will be required to get a 1099 form at end of the year. For full-time employees, a W-4 will be required. This will let you know how much you can deduct from their paychecks.
Also read: How Much does Outsourced Payroll Service Cost?
Accounts payable
You need to track your expenses and what your suppliers and vendors owe you as a business owner. Accounting software that supports billing, purchase orders, and payments to vendors will make it easier.
ERP
Enterprise resource planning (ERP), a feature that allows companies to collect and organize data so that they can work more efficiently, is called enterprise resource planning. This software supports accounting, manufacturing, and HR operations.
ERP is a single solution for managing all departments and processes within your company. This feature allows larger companies to reduce silos and improve transparency.
Inventory management
You must keep track of the inventory if your business sells products and goods. Inventory tracking software can help you monitor your inventory and notify you when it is time to order new items.
Accounting software can track information about your products. This information includes product images, SKUs, prices, and quantity.
To create customized pricing lists, you can also use accounting software. You might offer discounts to bulk customers who purchase your products.
How much does accounting software cost?
Pricing for accounting software depends on the size of your business, how many users you have, and the level of customization required. Accounting software may cost less than $10 per month if you are a solopreneur, small business owner, or sole proprietor. Software that is free and limited in functionality may be a good option.
However, companies with larger accounting requirements can expect to pay higher implementation and licensing fees.
Additional users that you add to your account will also be charged. Accounting software can only be useful if employees are able to use it properly. You may have to pay an additional fee to train employees.
How to choose the right accounting software for your business
You can track the financial performance of your business using accounting software. Make sure you choose wisely. These are some things to remember.
Bank integration
Make sure your accounting software integrates with your bank before you make an investment in it. Software that is compatible with your bank account will automatically download any new transactions, which can save you time.
Your business has many needs
Consider your business requirements when evaluating accounting software. An independent contractor with no employees will need different software than a business with multiple million-dollar revenues. Take your business’s size into account.
Software that is tailored to your industry should also be considered. Our review for FreshBooks concluded that it was an excellent choice for freelancers due to its advanced invoicing capabilities. The software can also be tailored for companies working in the retail, manufacturing, or restaurant sectors.
Your budget
Think about how much you can spend on accounting software. Many solutions, especially cloud-based, are affordable and accessible to almost all budgets. You can try many packages for free to see if it is right for you.
Cloud-based software
Cloud-based accounting software is a great option. Cloud-based software is accessible from anywhere and can protect data from loss. Cloud-based software is generally less expensive because you don’t need to pay additional servers or licensing to store your data.
Easy to use
You may not need to be as user-friendly if you employ a bookkeeper to manage your company finances. If you are handling your bookkeeping by yourself, accounting software should be intuitive and simple to use.
There may be some learning curves at the beginning. Look for companies that provide additional support and training. Our QuickBooks review revealed that the company offers numerous articles and videos on how to use the software.
Also read: Top 10 Invoicing & Accounting Tools For Freelancers
Scalability
If you only have a few business requirements, low-cost or free accounting software might be a good choice. When choosing accounting software, it is important to consider the long-term goals of your company.
Look for the most scalable software instead of selecting the cheapest. QuickBooks, for example, offers pricing plans that are suitable for all businesses. This allows you to start small and then add more features as your business grows.
Pros and cons of accounting software
These are the most important things to keep in mind when you’re evaluating accounting software.
Pros
Accuracy: When you rely on manual data entry there is the possibility for human error. Accounting software can connect to your bank to automatically categorize transactions. This allows you to ensure that your financial records are accurate.
Automation: One advantage of accounting software is the ability to automate your finances. The software uses artificial intelligence to record, reconcile and generate financial reports. The software eliminates repetitive tasks, so you can focus on other aspects.
- Affordable: While hiring an accountant or bookkeeper can be costly, most accounting software is accessible at a reasonable price. Wave, an accounting software program that is free, may be able to meet your needs. Finding the right accounting software can be a great place to start if you are looking for a low-cost solution to manage your company’s finances. Read our complete review Wave.
- Streamlined Invoicing: If your business relies heavily on clients for invoicing, using the right accounting software will save you tons of time. Software like FreshBooks allows you to create invoices in minutes and set up automatic payments reminders.
- Collaboration: Many accounting programs allow you to grant outside access to your accountant. This will save you time during tax season, and make it easier to pay quarterly taxes throughout the year.
Cons
- Technical problems: For most people, the greatest downside to using computer programs is having to deal with occasional technical problems. Cloud-based software is a great option because you can access it from anywhere. You can access your financial information even if your computer crashes.
- Potential for fraud: Cloud-based software offers many benefits, but also presents more opportunities for hackers. Hackers may gain access to your financial data if you aren’t careful. Access to sensitive information and money could be stolen by employees who have access.
As with all things, there are pros and cons to consider when selecting accounting software. Accounting software can help improve the financial visibility and accuracy of your business, as well as freeing up time to pursue creative and more profitable endeavors.
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