Businesses use accounting software to streamline accounting and bookkeeping tasks.
With the right accounting software, your business can increase productivity and cut costs. Finding the best software for you will depend on your budget and your accounting needs. Most accounting software covers basic functions such as storing and processing data. If your business needs additional features, such as forecasting or project accounting, you may need to pay for a premium plan.
Plans are typically month to month or annual and the price of basic plans generally ranges from $15 to $40 per month. Some free accounting software programs are available, but they only perform the most basic functions.
We’ve put together a guide to help you figure out what accounting software could best support your business. Read on to find out more.
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What is accounting software?
Accounting software can save your business time and money by helping to automate accounting tasks and processing financial data. However, not all accounting software has the same capacity.
Most accounting software performs basic functions such as storing and analysing data, bank reconciliation and bookkeeping.
Some include additional features such as payroll management, reporting and invoicing.
Accounting software can perform the following functions:
- Payroll administration
- Inventory management
- Project accounting
- Fixed asset management
What is cloud accounting?
Like other forms of cloud computing, cloud accounting allows multiple users to access documents and data on a single online server from computers, mobiles and tablets.
Also known as "online accounting", cloud accounting works the same as any other accounting software. However, rather than installing and saving on your desktop computer, your data is saved on the company's servers. This allows you to access your accounts from most Internet-connected devices.
Why would I want to store my accounting data on the cloud?
The main benefits of managing your business or personal accounts online are convenience and accessibility. When everything is stored on the cloud, you can access and retrieve it from absolutely anywhere as long as you have an Internet connection.
Does your employee need to make a payroll adjustment? They can simply jump online and make the correction, rather than coming into the office. Does your accountant have some questions for you at tax time? With cloud accounting, you can save yourself a trip to the office and collaborate online.
Benefits of accounting software
The right accounting software can help your business by carrying out the following functions:
- Increasing productivity. By eliminating manual day-to-day accounting tasks, accounting software can allow you and your employees to spend your time on other important company functions.
- Simplifying tasks. Accounting software is easy to use. Most systems can help business owners without financial backgrounds complete accounting tasks quickly with little-to-no training.
- Saving costs. For many small businesses, accounting software can eliminate the need for an accountant. You can save by conducting all company accounting in-house with accounting software.
- Forecasting and analysing. One of the biggest advantages of accounting software for many business owners is the ability to accurately forecast financial performance. This can help you adjust your budget to maximise company growth.
- Reducing errors. Accounting software can eliminate human error and help your business avoid costly compliance infractions.
- Automating payments. By automating billing and invoicing, you can ensure you always pay accounts on time.
- Enhancing security. Secure accounting software can protect your organisation’s financial data. The best accounting software protects you against hacks, theft and security breaches.
Do I still need an accountant if I have accounting software?
Many accountants use accounting software to streamline operations and manage accounts. Accounting software can help eliminate errors and time-consuming paperwork. Depending on the size of your business, you may not need an accountant to work in tandem with your accounting software.
Downsides of accounting software
Accounting software isn’t without problems, especially if you don’t choose the best software for your needs.
- Cost. Finding the right accounting software to meet all your needs can sometimes mean spending more for premium features.
- Scalability. You will likely have to pay more for a larger software plan if your business outgrows your current one.
- Administration. Accounting software doesn’t always eliminate the need for an accountant. Depending on the size of your company and the accounting functions you require, you may need an accountant to work in tandem with your software or at least help set it up.
- Flexibility. While packaged, or off-the-shelf, accounting software suits many businesses, you may require something more unique. Unfortunately, you can only customise this software within certain limits. If you require a lot of specialised functions, you may have to pay for custom-made software.
- Security risks. With the wrong accounting software, your data could be at risk. If your business stores sensitive financial information, you should consider increasing protection with antivirus software and other security programs.
What to look for when choosing accounting software
Considering your personal or business needs will help determine which accounting software is right for you. When looking for the best accounting software for you, ask yourself the following two questions:
- What is my budget?
- What accounting functions do I need?
Keep in mind, the more tasks you need your accounting software to perform, the more it will cost. Instead of looking for the cheapest program, look for the one that will give you the best return on your investment.
Once you have a better idea of what you are looking for, consider the following potential characteristics of accounting software:
- Easy to use. Your ideal accounting software should be relatively intuitive to set up and use. If you cannot operate the system, you will need to hire someone to do it for you.
- Security. Your accounting software will store some of your business’s more sensitive data. Make sure to select a trustworthy vendor by checking out its security features and reading user reviews.
- Trial period. Most accounting software comes with a one-month trial period. You can use this time to make sure the software is meeting all of your needs before committing.
- Mobile options. Do you want to be able to access your accounting system from your phone or tablet? If so, only consider software plans that include options for mobile use.
- Room for growth. Look for accounting software that can grow with your business or at least allows you to upgrade your plan as your business expands.
- Compatibility. To save yourself a headache, choose accounting software that is compatible with whatever systems your business is currently using.
- Customer support. Look for providers with 24/7 customer support and good customer reviews.
3 things to consider
- Additional fees. Some accounting software vendors charge additional fees for certain software updates. You may also need to pay more if you need to add on any features or upgrade your plan as your business evolves.
- Adjustment to new software. It may take time for your business or organisation to switch over to your new accounting software. Allow time for training and fine-tuning.
- Banking. Accounting software is only one part of your financial process. Your bank or financial institution can affect the speed at which your financial transactions take place. It is important to make sure your accounting software supports your bank.
The right accounting software can help your company save time and money. For some businesses, this means switching all accounting duties over to accounting software. At other businesses, an accountant will work with the software to provide both manual and automated accounting services.
While finding the best accounting software can take time, effort and money, the benefits of using accounting software can outweigh the costs.
If you’re interested in streamlining your businesses practices, start browsing accounting software today. If you’re looking for other ways to increase business productivity and cut costs, check out our business software comparison.