As a business owner, keeping track of your finances is a critical part of your company’s success. Knowing where your money is coming from and where it’s going is the driving force for your long-term financial health.
But researching the right accounting software for your business can be overwhelming. It seems like there are countless options with numerous add-ons, all with different pricing plans.
To help you make an educated decision, here are four things in mind when choosing accounting software for your business.
4 Tips for Choosing the Right Accounting Software for Your Business
1. Talk with your accountant and IT staff
Your accountant is an excellent place to start when it comes to choosing accounting software. Whether you have in-house accountants or rely on an outside CPA, it makes sense to ask them what they think. They likely have years of experience working with many different accounting programs, so they can offer valuable insight into what your business needs from an accounting perspective.
If you’re using an outside CPA to prepare your taxes, you’ll want to make sure that the accounting software you’re using is compatible with their technology. Make sure the program or platform you’re evaluating can provide the necessary data and reports to prepare your tax filings.
Don’t forget to include your IT department in the discussion, as you’ll need to understand your hardware capabilities. Accounting software uses extensive databases to store your financial data, and these databases use hefty amounts of storage and processing power. Ensure that your IT infrastructure can handle the workload now and in the future as your business grows.
2. Understand your accounting needs
After your discussions with your accountant, you’ll likely have a better understanding of your specific accounting software needs. There isn’t a one-size-fits-all solution; while all accounting software will offer some level of basic general ledger accounting functionality, there’s a lot more to consider beyond the basics.
Make a note of whether your company needs additional accounting modules for things like:
- Payroll/timesheet tracking
- Inventory tracking
- Fixed asset tracking and depreciation calculations
- Sales tax calculations
- Payment processing
Some accounting software have these modules built-in, but others charge for additional modules. It may be a one-time fee for modules that don’t frequently change, like invoicing and inventory, or it can be a subscription service for things like payroll and sales tax, which can change frequently.
And if your business operates in an industry that uses specialized software, make sure it will integrate with whatever accounting software you’re considering.
For example, doctors and dentists need to use medical billing software to collect from insurance companies. Ensuring their existing billing software is compatible with their accounting software will prevent extra work.
3. Examine your budget
Accounting software costs vary depending on the features it includes, and if it’s cloud-based or on-premise. And in some cases, the number of users further impacts the pricing.
Cloud-based options generally charge a subscription fee that can be as low as $10-15 per month for the most basic options but can go as high as several hundred dollars a month. You may be able to get a discount if you pay for an annual subscription instead of monthly.
If you choose to license software so you can store your data on your network (on-premise), you can expect to pay several thousand dollars for the most robust systems. And unlike cloud-based options, you’ll need to work with your IT department to implement backup procedures to make sure you don’t lose data during installation.
Along with a licensing fee, keep in mind that you may need to hire consultants to help you set up your software. Getting the software tailored to fit your business needs on the front end will save you time and money in the long run, even if it comes with a higher upfront price tag.
4. Think long-term
It takes time and money to select and install new accounting software, not to mention train employees on how best to use it. So you’ll want to make sure you choose software that can fit your business needs as your company grows.
Make sure the software is scalable and allows you to add new users and modules as needed over time. Being stuck with software that can’t grow with you means you’ll likely go through this entire process all over again, spending even more time and more money unnecessarily.
Look into how often the software is updated and what the process entails. Find out if updates are included in the overall purchase price or if they cost extra. And learn what kinds of long-term customer support options for troubleshooting and maintenance are available and their associated costs.
Wrapping it up
Choosing the right accounting software for your business takes time. Spend that time discussing your needs and options with key individuals like your accountant and IT staff. Also, be sure to look at a long-term view of your business so you can choose software that fits your needs today and can grow with you.
There is no one-size-fits-all solution out there. But if you take the time to study and consider your specific business needs, you’ll discover the accounting software that’s the best fit for your specific business.
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