The practice of recording financial transactions has been around for thousands of years. Luckily you no longer need to use your abacus or tally your numbers in thick ledgers to keep your business's finances in order. Business accounting services and software and services are easy to find and only a few clicks away. But which one is right for you, and what do most small business owners look for when it comes to selecting the right accounting software?
Luckily we've done the research for you and surveyed small business owners who have already gone through the process of finding their ideal accounting software. Here's what to look for when making your choice between small business accounting software, along with some insights from small business owners and entrepreneurs.
1. Data Security
Keeping data and financial information safe is a very real concern for business owners who keep large amounts of critical information online. Securing this data and using reliable software is key to any business’s financial well-being.
According to Statista, 164.7 million records were compromised in 2019 as a result of data breaches. The previous year saw the highest level of breaches, with 471 million records exposed and used for malicious purposes, including identity and monetary theft.
Kelsey Chan, marketing specialist and founder of CocoSign, agrees that data security is of the utmost importance when choosing small business accounting software. She advises small business owners to “make sure your accounting software is compliant with industry safety standards so that all your financial data won’t have to suffer risks of information leakage.”
Accounting software packages and services can range from a few hundred dollars to thousands of dollars each year. How much are you willing to spend on your accounting software, and is the expense within your budget?
David Walter, founder and CEO of Electrician Mentor, recognizes the range in prices and the different levels of support most software options offer small business owners. “If you're a smaller operation, you might need to go with a more budget-friendly option. However, it can also be beneficial to pay a bit more for software that is more all-encompassing.”
Jacob Dayan, CEO and founder of Community Tax, points out that small businesses will need to understand “the cost and break-even point to determine if it makes sense to pay for the software.” Dayan says that taking this into account will “determine whether the time savings are worth it. For some businesses, the cost may also vary to account for the number of users and the bells and whistles that you are looking for."
3. Accessibility Options
Every business will have different requirements when it comes to who needs to use the accounting platform. You'll need to find out how many people can have access to the software, if it's cloud-based and if there's a mobile app.
According to David Walter, one key factor to consider when deciding which accounting package to purchase is accessibility. “This is important because some products have limits in that area depending upon the package you choose. Also, is a cloud-based service a better option so your folks can access it from basically anywhere?”
For Alan Lefkowitz, founder of CFO Strategies, echoes these sentiments. He recommends considering "if you can use the tool remotely and whether it’s cloud-based, especially during the pandemic." With many businesses operating remotely, the ability to easily access your accounting software and get real-time, accurate data is important.
4. The Right Features and Tools
Are there specific resources or tools that you require to run your business? Do you need your accounting software to track orders? Generate specific reports? Or are you just looking for ways to record accounts payable and receivable?
Kelsey Chan advises that small business owners should take into account industry-specific requirements that may need to be met. “For different businesses, there are various needs for an accounting software such as integrations with ecommerce platforms or the capability to track website profitability.”
Jacob Dayan says it's best to consider "the kind of support the software has and determine if it's a right fit for your business needs. The software may be able to streamline workflows, eliminate some human error, [provide] potential cost savings, it can provide automated reports, manage and store data, and help with tax filings, among other things. There is no one-size-fits-all accounting software as every business has different needs, so it's up to the business to research whether or not it could be worth it."
5. Product and Service Scalability
Some small business owners may only need a no-frills accounting program to help cover their basic needs. Others may want to have access to more elaborate options and services. It all depends on whether you want to meet your immediate needs or think ahead and plan for the future.
George Birrell, CPA and founder of TaxHub, notes that “when choosing accounting software, a lot of small businesses like to think big and look at all the ‘fancier’ features that they can get." This, to Birrell, is understandable as it can be exciting for a business owner to plan for future growth. "While these features might benefit you later on, the best thing to do in the beginning is make sure all your basic needs for functionality are covered. There’s no point in getting software that offers advanced features to help you in the future but doesn’t cater to your current needs."
Andrew Schrage, CEO of Money Crashers, suggests that whatever option you choose should also have the capability to grow with the business. “As you add employees and clients, you’ll want to be able to add employee seats to your account and have ample flexibility to add new clients, projects, retainers and the like. Yes, you’ll pay more as you scale, but that’s better than outgrowing your program.”
6. Dependability and Accuracy
Ultimately, the accounting program you choose must be accurate and reliable. Every small business owner understands the importance of error-free financials. Luckily, computing has helped make human calculation a thing of the past. That is, as long as there are no software bugs to contend with.
Michael Astreiko, the CEO of Synder, recognizes that business owners have to rely heavily on their accounting software and trust in its accuracy. “I see a lot of businesses looking at several things when choosing accounting software. First among them is precision. Businesses have to worry about many things like payroll, cash flow and others. Whether their accounting system records every transaction, including any bank and vendor fees, refunds, discounts and more, shouldn’t even be on their mind.”
Choosing the Right Small Business Accounting Software
Fortunately, the days are long gone when accounting clerks like Bob Cratchit (remember A Christmas Carol by Charles Dickens?) were hunched over a ledger checking the day's revenues and expenses. But the need to stay on top of your business finances remains, and choosing the right accounting software can help keep your small business on track. Every business has different needs, so it's up to you to make the right decision on your accounting strategy.
Incfile is here to make it easier for you with our mobile-friendly bookkeeping software, quarterly bookkeeping and financial reports and tax preparation and filing services. Our free tax consultation can help you determine if Incfile can meet your small business accounting needs.