If you walked into a supermarket in the 1990s, you would have had about 7,000 items to choose from. At the time, that seemed like a lot. Fast forward almost 30 years, and your local Kroger, Safeway, or Whole Foods now stocks 40,000 to 50,000 items!
Heinz and Hunt’s used to be your only ketchup options. But now, some brands may actually offer 57 varieties! (Heinz never had that many—it was just a marketing trick.) You can even—heaven help us—find fruit ketchup on the shelves.
The world of accounting software isn’t much different. Today’s options can be overwhelming.
In 1955, the market was dominated by the Univac 1 system, the first commercial computer produced in the United States. That’s when General Electric purchased one of these behemoths and used it strictly for accounting. (Fun fact: The $1.2 million, 29-ton machine took 40 hours to do payroll! And if it’s taking you that long to do payroll you really need to talk to Whirks.)
Fast forward to today, and you’ll find scores of options when it comes to accounting software. So, how do you choose which one is best for you and your small business?
I want to give you 4 key questions to ask when looking at accounting software:
- What features do I need?
- Does it integrate with other tools I use?
- Is it cloud-based or desktop?
- How much does it cost?
1. Features
The lower-end packages from most software companies should be plenty for most solopreneurs or freelancers. If you have a brick-and-mortar business or several employees, you probably will need packages that have more features.
Some basic features to look for:
- Invoicing
- Expense tracking
- Financial reports
- Time tracking (important for service-based businesses)
- Inventory tracking (important for widget-based businesses)
Beyond that you might benefit from the ability to process online payments and built-in tax-time calculators and reports that you can easily send to your accountant.
2. Integration
If you currently use software to process payroll, run a POS system, email marketing, or any number of other functions, make sure the accounting software you purchase is able to integrate with those other tools.
You’ll save a lot of time and money by not having to jump back and forth between multiple programs constantly. And there will be less room for accounting errors due to double entries.
3. Cloud or Desktop
The big players in the accounting software arena (Freshbooks, QuickBooks, and Xero) are all cloud-based.
The advantage of this is that your information is available wherever you go, and you are protected from crashes and data loss. However, many small businesses that have a lot of complexity in their operations may find that desktop software installed locally is more robust and meets their needs better.
Your accountant can help you evaluate which option might be best for your business.
4. Cost
Most cloud-based accounting software operates on a monthly subscription model, ranging from $10 to $60 per month, depending on the service level. Some premium packages top out at $180/month with all features included.
So take an honest look at your needs and don’t overbuy. You can always upgrade as your small business grows. Nearly all companies offer discounts if you sign up for an annual plan, so definitely consider that.
Narrowing Down Your Accounting Software Options
Regardless of which software you ultimately choose, the good news is that (unlike ketchup) there are no fruit flavors. The best accounting system is the one that works for your business’s unique needs. Now that you know what to look for in accounting software—features, integrations, cloud vs. desktop, and cost—the next step is choosing the best option for your business. With so many choices available, how do you decide which one fits your needs?
If you’re still unsure, most platforms offer free trials, so you can test them out before committing.
But we’ve made it even easier for you! Read our Top 3 Small Business Accounting Software Options Compared, where we break down the leading software choices, comparing their features, pricing, and best use cases.
