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 about 35 years, and your local Kroger, Safeway, or Whole Foods now stocks 30,000 to 40,000 items!
Heinz and Hunt’s used to be your only ketchup options. But now, some brands may actually offer 57 varieties! 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 I, the first commercial computer produced in the United States. That’s when General Electric purchased one of these behemoths and used it for payroll and inventory control at its Louisville appliance plant. (Fun fact: The $1.2 million, 29,000-pound machine took 6 hours to run payroll for GE's 10,000 employees. BTW, if it’s taking you that long to do payroll, you really need to talk to our sister company, 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?
Here are 4 key questions to ask when looking at accounting software for your small business:
- What features do I need?
- Does it integrate with other tools I use?
- Is it cloud-based or desktop?
- How much does it cost?
Let's get into it...
1. What Accounting Features Does Your Small Business Need?
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'll probably need a package with 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 you can easily send to your accountant.
2. Does Your Accounting Software Integrate With Other Tools?
If you currently use software to process payroll, run a POS system, manage 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. And there will be less room for accounting errors caused by double entries.
3. Cloud-Based or Desktop Accounting Software?
The big players in the accounting software arena (FreshBooks, QuickBooks, and Xero) are all cloud-based.
The advantage is that your information is available wherever you go, and you're protected from crashes and data loss. At Patrick Accounting, we work in QuickBooks Online with most of our clients, and Restaurant365 with our restaurant clients, because cloud-based tools make it easier for us to support you in real time.
That said, some small businesses with 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 is best for your business.
4. How Much Does Small Business Accounting Software Cost?
Most cloud-based accounting software operates on a monthly subscription model, ranging from about $20 to $90 per month for most small business plans, with advanced-tier packages running $250 or more per month.
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), you'll want to take steps to find the best option for your business. But with so many choices available, how do you decide?
Luckily, most platforms offer free trials, so you can test them out before committing.
But we’ve made it even easier for you! At Patrick Accounting, we work with small business owners every day who are trying to make this decision. Read our Top 3 Small Business Accounting Software Options Compared, where we look at the leading software choices, side by side, covering features, pricing, and best use cases.
