If you walked into any supermarket in the 1990’s, you would have been able to choose from about 7,000 items. It seemed like a lot at the time. But fast forward almost 30 years, and your local Kroger, Safeway, Whole Foods, or wherever you shop typically has 40,000 to 50,000 items!
Heinz and Hunt’s used to be your only options for ketchup. But now there may actually be 57 varieties of some brands! (Heinz never had that many…it was just a marketing trick.) You can even–Heaven, help us–find fruit ketchup on the shelves.
It’s not that different in the world of accounting software. 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 talk to Patrick Payroll.)
In the late 1990’s, personal computing took off. For accounting firms, the introduction of electronic spreadsheets were a godsend. And accounting software finally got personal thanks to Quicken. Now non-accountants had a tool to manage their own finances like the pros.
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:
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- Invoicing
- Expense tracking
- Financial reports
- Time tracking (important for service-based businesses)
- Inventory tracking (important for widget-based businesses)
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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 constantly jump back and forth between multiple programs. And there will be less room for accounting errors due to double entry.
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.Next week, we’ll take a closer look at the three most popular accounting software options and help you cut through the confusion as you’re weighing your choices. Regardless of which software you ultimately choose, the good news is that (unlike ketchup) there are no fruit flavors.
4. Cost
Most cloud-based products have a monthly fee that can range anywhere from $10-60 depending on the level of service you sign up for. (One popular software tops out at $180/month if you get all their bells and whistles!) 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.
Next week, we’ll take a closer look at the three most popular accounting software options and help you cut through the confusion as you’re weighing your choices.
Regardless of which software you ultimately choose, the good news is that (unlike ketchup) there are no fruit flavors.
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