Most small businesses use a hodgepodge of tools, ranging from pencil and paper to customised spreadsheets, for their accounting needs. This works fine if you have a simple business with few transactions, such as a consulting firm with a small number of clients who bill monthly. But if your business handles a lot of sales or is growing quickly, you'll need a full-fledged accounting software program to keep track of your company's finances and create reports that will help you develop a budget.
Will this software serve your company and its budget better than hiring an accountant or outsourcing to an accounting firm? If your needs are fairly straightforward and lack complicated bookkeeping issues, then yes, boxed software should fit the bill. As your business grows, however, you may be better off hiring an accountant and using your valuable time for something else. Not to mention the fact that as the fiscal side of your business becomes more complex, the likelihood that your accountant can find clever (legal) ways to save you money becomes more likely.
At any rate, if you’re going the software route, at the risk of stating the obvious, make sure that the package you pick has the features you need. For example, if your business requires specialised reports, you'll need accounting software with customisable reports. Or if you run a service business, make sure that the accounting software offers a time-and-billing module.
Some other good features to have are the ability to print cheques, purchase orders, and invoices, or send them electronically. Integration with Microsoft Office provides the flexibility to, say, bring financial data into PowerPoint so you can give a presentation. Also, in order to get started quickly, make sure that the accounting software can import data from other accounting programs, spreadsheets, and plain text files.
The software you buy should have an intuitive interface, since you'll likely spend a lot of time using it. Take a close look at it before you buy, by downloading a demo or checking out what your colleagues are running, to make sure that you and your employees will be able to learn it quickly. The last thing you need is to incur additional expenditures for training. And if the software is too hard to use, then no one will, and company finances will quickly fall into disarray.
Don’t underestimate the fact that the quality of the help documentation can make or break accounting software. You don't want to call technical support when you're up at two in the morning, cranking out the latest quarterly report. Make sure that the software includes context-sensitive help and a searchable help index. Tutorials and demos can get you up and running quickly. Make sure that a manual – online, PDF, or printed – is provided. Check out the tech support centre on the manufacturer's website. Does it look as if you could learn from it? Better yet, talk to your peers and find out if they think their accounting software is easy to use.
Keep a watchful eye on the future. Make sure that the solution you choose will be able to grow with your business. If you think that your business is going to expand to the point where multiple people will need access to company financial data, then make sure that a multiuser, networked version of the software is available.
Other questions to ask are: Is it fairly priced? Is it easy to add users? With some accounting software, adding users is as easy as buying more licenses and entering the license key. With others, you may have to purchase additional full copies of the software, which can get pretty pricey.
Finally, what would we recommend as good starting places in your search for accounting software? QuickBooks is probably one of the best known solutions, and is a great option (although the high-end Enterprise version has weaknesses, as we pointed out in our full review). Sage 50 and AccountEdge are two other well-known options to consider.