How to Choose the Best Small Business Accounting Software

All small businesses could benefit from extra time and resources. The tedious parts of running a business – keeping track of your business expenses, issuing estimates, invoicing customers, and tracking down payments – all take up valuable hours of the day.

That’s why almost every modern business has turned to accounting software. Not only will it cut down on costly human errors and free up your staff, but it can also provide you with valuable insights about your business. In addition, it allows you to automate tasks like billing customers and chasing down unpaid invoices.

In short, accounting software exists to save you time and help you get paid.

There are so many different platforms out there that it can be challenging to choose the right one for your business. To help, we’ve created a breakdown of the eight critical questions you should ask yourself before settling on a suitable software.

Before you get started, remember that accounting software will not magically do your accounting for you. It’s just a tool to make the process easier. You still need to have a good grasp of your financial situation and the scope of small business accounting before you can use the software to its full potential. So choose software that makes your life easier, not the one packed to the brim with the most features.

If you want to choose the best accounting software for Australia, don’t forget to read our article.

8 essential questions to ask yourself when choosing the best small business accounting software

1. What’s my budget?

It’s a good idea to determine your budget before setting out on your decision-making journey. This extra bit of planning will help you narrow down a vast field to a few appropriate candidates.

Most companies provide a variety of pricing tiers to suit businesses of various sizes. For example, some pricing models are based on flat monthly fees, while others are based on the number of users. Smaller enterprises might benefit more from the monthly subscription model. This way, you don’t have to pay extra fees whenever you invite someone onto the platform to help you handle the bookkeeping.

Many basic plans are offered at irresistible price points, but take a close look at the features they include. Will you need to upgrade to the more costly plan with the full range of features at some point, and will you be able to afford it?

Don’t forget to factor in any extra support costs, and make sure that you aren’t paying for a bunch of features that you don’t need. For example, programmable automation capabilities might seem like a great thing to have but are built primarily for larger organizations handling large amounts of data. Does your small business need the most advanced features available, or will it benefit more from simplicity and ease of use?

Many platforms offer a free trial, so it might be wise to take advantage of that opportunity. It will waste a lot of time and effort if you end up having to switch to another platform in the future. Make sure you’re well-informed before you make your final decision.

2. Does this accounting software suit my small business or industry?

Many top digital transformation companies are now incorporating business accounting software into their operations to streamline financial management and improve overall efficiency. Not all accounting software is alike, and while certain platforms have a more general scope, others may be built to suit the needs of a specific industry. So don’t just go for the software with the highest reviews or most extensive user base. Instead, there might be a smaller platform tailor-made for businesses in your field.

For example, think about your industry-specific requirements. Do you offer consulting services that require proposals and contracts to be reviewed by both parties before proceeding? Do you need software that allows you to handle bookings or schedule appointments? Or perhaps you are primarily interested in tracking the time and travel expenses of your employees.

Here are some industry-specific features. If any of these apply to your business, note it down as it might not be included in every platform.

• Inventory management
• Sales tracking
• Time tracking
• Expense tracking
• Travel expenses
• Customer information database
• Budgeting capability
• Estimates and quotations
• Proposals and contracts
• Payroll
• Tax reports
• Financial analysis
• Project management

Look for the software that can handle your main requirements – it will save you the hassle of adopting a generalized platform to suit your particular needs.

3. Do I need a cloud-based or desktop-based accounting software?

Desktop accounting software was the industry standard for many years. It does not rely on internet access, is often purchased in a single payment for use on one computer, and can securely store a business’s financial data offline.

However, cloud-based platforms are becoming the norm for modern accounting systems. There are several benefits to a cloud-based platform. For one, it allows many users to access the same data so that you can bring in an accountant or other employees into the same workflow. Another benefit is the ability to directly sync with bank accounts or any number of helpful app integrations.

Data is regularly backed up via the cloud so that you don’t have to worry about a single computer getting broken or becoming corrupted. The only drawback to cloud-based platforms is that they only work via internet connection. So, if your business operates in an area where that is an issue, you might want to consider a desktop-based solution.

Additionally, storage optimization may be necessary to maintain optimal performance on your MacBook, especially if you’re dealing with large files or if your disk full.

Most cloud-based platforms have well-developed mobile apps as well. Suppose you travel frequently or are a service provider like a handyman who needs to generate quick invoices on the go. In that case, you might want to focus your attention on the mobile app versions to find your best fit.

4. Will it be easy for me to use?

Once you’ve made your choice, you’ll be spending a lot of time interacting with this software. Is it something that you find convenient or even a pleasure to use? Or does it seem complicated and frustrates you every time you open it.

Sometimes this aspect can be overlooked, but it’s not something to be taken lightly. Even if you don’t have an accounting background, a small business operator must have a good grasp of their finances. Many programs offer comprehensive financial reports, but they should be intuitive to generate and understand. The program also needs to be easy enough for your employees to use.

Many platform interfaces are loaded with features that you might not need. Opt for the platform that will save you time by streamlining tasks and showing you only the features most relevant to your core business activities. After all, this is supposed to be a way to increase efficiency, not slow you down.

5. How many users and clients can this software accommodate? Can user access be restricted?

Different software is built with different-sized businesses in mind. While some cater to a broad user base, many of the best platforms target one end of the spectrum.

If you are the sole user interacting with the software, look for the platforms that give you the most streamlined experience. If you need software that will accommodate several team members and an accountant at once, then look for a more comprehensive solution.

If restricted user access is something you require so that not everyone in your company has access to your finances, prioritize this feature. Some platforms offer role-based access for different team members. For example, you can allow employees to access the time tracking or expense reporting features without granting permission to create invoices.

Also, keep in mind that you may or may not need a client portal. Do you need to provide clients access to their payment records within the app? Only some platforms offer dedicated support for this feature, so plan accordingly.

6. What type of support does this software provide?

There’s a very good chance that you will need to contact customer support at some point. You should be sure that they’ll be able to help you answer your questions – before you run into problems.

Smaller software providers often put a lot of effort into self-service troubleshooting guides and community forums. Browse these resources and see if people are running into the same issues time and time again. Larger companies should have a team of dedicated support agents. Reach out to them for any questions you have about their platform, and gauge the quality of their responses.

Finally, make sure to read through positive and negative reviews of the software online. The last thing you want is to be surprised by a glaring weakness in the accounting software after you’ve already invested hours into getting it set up.

7. Will this accounting software scale with the growth of my small business?

Perhaps you’re a freelancer who needs to invoice customers for your side hustle. In that case, focus on an option that gives you all the features you need for the lowest price possible.

However, if you’re planning to scale your business and want your software to grow with you, then make sure the platform can accommodate your future needs as well. Do the premium price tiers include the advanced capabilities you’ll need? Many software providers also offer customized solutions for when you outgrow their basic subscription models. Do some digging into what these custom solutions are and if they will help you scale or hold you back.

Here’s another thing to keep in mind. Does your small business use cash-based or accrual-based accounting? Small businesses will often start by recording transactions based on cash flow. However, as you scale, you will likely be switching to an accrual-based system. You’ll need to handle more sophisticated data related to buying and selling on credit and recording payable and receivable accounts. Be aware that some of the more basic platforms are only geared towards cash-based accounting.

8. Do I have the knowledge required to use it?

Most software these days is built to provide a very intuitive user experience. However, some platforms cater more towards the professional accounting industry. Others direct their efforts to users with no accounting or tech backgrounds at all. You know which category you fall into, so make sure you consider this during your selection process.

Furthermore, don’t be distracted by deep functionality if you won’t be able to use it to your advantage. For example, if your software has the capability for a wide variety of automation processes, but you can’t program them, then it’s not going to do you much good.

Some other key features to look out for in a small business accounting software

•  Customization

Does it offer customizable templates and other customization tools so that you can adjust documents like invoices or e-mails to fit your branding?

• Multicurrency and multilanguage support

If your business operates across different countries or serves a multi-lingual community, then you need a platform with these features built in. That way, you can customize your invoices and payment preferences appropriately.

• Security

Check to ensure that proper security measures are followed to protect both you and your clients’ data. Two-factor authentication and data encryption should be pre-requisites.

• Taxes

Does the platform enable the correct type of tax customization on the invoices? Can it generate the relevant tax reports?

• Reporting requirements

If your business is subject to any specific reporting requirements, then make sure you can easily create the appropriate documents. Otherwise, you’ll spend a lot of time generating them manually.

• Bank and payment gateway support

Can you conveniently link your software to your bank and preferred payment processors? Are you able to reconcile accounts by fetching bank statements? If your bank doesn’t support the software, then you should look for something else.

• Third-party integrations

Some accounting software platforms are integrated into a linked ecosystem of CRM software, e-mail management, inventory management apps, etc. Others offer the ability to connect to dozens or hundreds of third-party apps. If you already rely on a particular app to run your business, check if it integrates with your accounting software.

The integration of inventory management software with accounting software is crucial for real-time tracking of stock levels and financial data, ensuring accurate reporting and more efficient business operations.

• Project management and time tracking

You may already be using a dedicated app for these tasks. If so, check if they can be integrated into your accounting software of choice. If not, consider looking for a platform that does both. After all, billing for project expenses and time is directly linked to your accounting workflow. Therefore, it makes sense to bring them into the same system.

Get a second opinion

Talk to your accountant and staff

If your accountant or other staff members are going to be the primary users interacting with this software, then make sure you involve them in the selection process. Your accountant will likely have specific requirements in mind or is already accustomed to working with a particular program. Your IT support staff can help you evaluate the different tech capabilities and advise your data management strategy.

Reach out to your network

Ask around for other opinions from people in your network, especially from people in similar industries. Chances are, they’re using accounting software and can give you first-hand experience on its suitability for your needs.

Make a shortlist, and try out your options

 Now that you know what you want, you can narrow down the numerous options into three or four of the standout contenders. Then, compare them against each other, read positive and negative reviews online, and reach out to their support teams about any questions you might have.

As a final step, take advantage of their free trials or limited free plans. Create some invoices, play around with the reporting features, and input some expenses. If something doesn’t feel right, or it seems to be missing a key component, then move on.

After navigating the different user interfaces on your shortlist, you’ll understand what excites you or disappoints you about a platform, and you can make your decision accordingly.

A final question: do you need accounting software after all?

There’s a chance that you’ve gotten to the end of this guide and are thinking: maybe I don’t need accounting software after all.

 Perhaps you’ve realized that the extensive functionality of accounting software platforms is just going to overcomplicate things. What if you won’t be able to take advantage of all the features you’re paying for? Maybe you simply don’t have the budget at the moment because you’re just starting out and only have a couple of clients.

If that describes you, then consider an alternative that isn’t full-scale accounting software but still handles all your small business needs.

Billdu – your small business accounting software alternative

We built Billdu with people just like you in mind. It’s perfectly fine to hold off on advanced accounting software until further down the line. Most of our customers do. Partly, that’s because once they’ve tried our platform, they realize they didn’t need accounting software to begin with.

By now, it might have struck you that all you’re looking for is a simple, user-centric platform that ‘only’ makes the invoicing process easy and helps you get paid faster. As a bonus, it tracks expenses, manages customer communications, and facilitates online booking without cluttering the user interface.

This platform is Billdu, and while it isn’t accounting software per se, we know that most of our happy customers would rather keep it that way. After all, we built it specifically for freelancers and small businesses like you.