Small business managers have all heard about it from marketers or from their colleagues in other companies: there comes a time when small business accounting software becomes a more relevant option than keeping the books the old-fashioned way.
But when does this moment happen? And once the decision to make that move has been taken, what are the features and services to look for in small business accounting software?
Why - and when - choose an accounting software
Accounting software packages enjoy many advantages over more traditional bookkeeping ways - but not every company may actually need one, or rather, not immediately.
Available accounting options
Accounting can be done using three different techniques:
- paper bookkeeping: all the accounts are still actually in physical “books”, and all the work remains paper-based;
- spreadsheet bookkeeping: the first step in computerised bookkeeping means that some program is used in lieu of simple accounting software, although this software was not specifically designed to be used for this purpose. Usually, the program used is Microsoft Excel.
- small business accounting software: even with simple accounting software, programs have been built for bookkeeping purposes.
When size of operations matters
Because they are designed with bookkeeping in mind, small business accounting software products help users achieve more accounting processes, much faster, much more accurately, but require a little knowledge of basic accounting mechanisms.
The minimum foundation should be to be able to build charts of accounts, and more than the money needed to buy the software, it’s the time needed to learn these basics that matters to a complete newcomer.
The scale of accounting operations which need to be done is the indicator: a small company with less than five clients and five staff can perfectly rely on spreadsheet or manual bookkeeping. But come more suppliers, more clients, complex procurement and invoicing needs, the investment to get simple accounting software becomes justified.
How to choose the right small business accounting software
When the decision has been made to get the software, comes the problem of choosing the right product. Sorting the necessary and not-so-necessary features, and a handful of other important factors are enough to get a clear understanding of which programs can fit the bill.
Even simple accounting software include the following features:
- sales reporting,
- inventory management,
- merchant account support,
- tax reporting,
More advanced accounting software will add:
- payroll features,
- stock management,
- advanced payroll services like leave management,
- business-department-sensitive accounting,
- complex software integration,
- multiple currency management,
- multiple bank account management,
- industry-specific features.
Other factors to consider
There are other important factors to consider when contemplating the purchase of even simple accounting software:
- scalability: small businesses will become big, and the capabilities of cheaper, simpler software may not follow,
- multiple user policies: how many people will actually use the software? Which user can exactly see what kind of data, and use which features?
- external requirements: some accountants, or some business banks may prefer or even insist on working with specific systems, or at least systems which can export data to fairly standard formats.