Whether it’s your first business or your fifth, the right small business accounting software can make or break your business.The small business accounting software used can have a dramatic effect on how well a business can adapt to quickly changing conditions and investment opportunities. Most small businesses don’t have the budget for an accounting department, and many businesses end up tracking their finances on their own. I always recommend that people who run a small business spend the same amount of time selecting a suitable software package as they would when hiring a new employee. When I’m searching for a new software package, I tend toward programs that provide the features I currently need, can grow with my company and provides a full set of features.
What Type of Company Needs Accounting Software?
In my experience, there are very few companies who don’t need small business accounting software. A business needs to track several types of income and expenses to maintain compliance and abide by tax laws. Companies may need to track multiple vendors, donations to charities or reimbursements for employee expenses. I see many companies that started with a hand-written ledger or spreadsheet and then move to a software-based accounting approach. Changing accounting software or methods can cause major disruption to a business and increases the chance of making accounting mistakes. If there is an issue with a handwritten ledger, it’s less likely to get noticed right away. This can create additional work and generate an inaccurate overall financial picture, which can affect the ability to make sound financial decisions.
Improve Company Scalability and Growth
A company just starting out might not need all of the complex inventory and vendor tracking features provided by a full-featured accounting solution. However, as the company grows, the accounting needs should grow as well.
In the beginning stages, a start-up may only need a program that organizes finances, pays bills, and manages cash flow and basic assets. More established companies may need to start tracking inventory, jobs, expenses and provide accounting control to more than one user. Enterprise-level businesses may need even more users and features specific to their industry. For example, a charity needs to create specific invoices and follow procedures to ensure that donations are processed properly and remain compliant. Some organizations may get grants from the government, which must be used in a very specific way. Companies that fail to follow correct accounting procedures may be fined or lose aid for failing to correctly document how funds are spent. There are several laws, generally accepted accounting principles (GAAP) and financial regulations that every company must follow. Software-based accounting programs can help maintain compliance without the need for a degree in accounting.
As a company moves between the different stages of growth, it’s a good idea to avoid the need to look for and learn new accounting programs. This is why I’m careful to evaluate my current and future needs when considering any program. By doing so, I can maintain compatibility between current and past company files, since I don’t need to working about the complexity involved in migrating data files between different applications.
Choosing the Right Program
There are several options available for a company that needs small business accounting software. I love that Sage offers small business accounting software with all the bells and whistles needed in an accounting solution. One of the things I like most about Sage is the ability to purchase add-on services to pay employees using payroll services, accept credit cards and use mobile devices to keep track of accounting while traveling. All of these features make it easy to keep track of my business, and the software also grows with my business. Sage offers options for a company at any stage of growth. There are packages for a company just starting out, a company starting to expand and grow or an enterprise-level company that manages hundreds of employees. Small details matter in a small business accounting software package, so it’s important to carefully review the details of any potential software package.
Reporting is one of the most crucial reasons to get a full-featured, small business accounting software package. I once used a handwritten ledger to keep track of my company finances, and had ten minutes to prepare a presentation for a potential investor. I ended up using outdated reports from a previous business briefing, which left out any recent sales history and gave an incomplete picture of my company. Needless to say, I didn’t impress the investors. If I had a software-based solution, I could have quickly selected and printed from several pre-configured reports. If I needed something specific, such as inventory turnover rate, I could create a special report to indicate those trends. Reporting helps to identify where a company has been, where it is currently and where it is going.
Software as a Service Options
One of the things I recommend for any small business is to choose a subscription plan whenever possible. A subscription plan ensures that the latest software and updates are always available. Purchasing a subscription can help spread the costs of a more expensive software solution over the course of a year. Most accounting software companies offer the option to purchase an annual or monthly subscription.
Monthly subscriptions can make it possible to afford a full-featured program, while helping a business plan for and control the expenses associated with maintaining an accounting system. In contrast, when paying for the software outright, the latest security updates for the software may not be downloaded and installed. For my company, subscription accounting services help me stay abreast of important new features and ensures I’m using the latest accounting methods. Most subscription plans also come with unlimited access to support and automatic delivery of updates.
Choosing the right software package can make basic accounting tasks easier by automating the process of sending invoices, late notices, automatic billing and other tasks. Templates can be used to create quotes and provide estimates. Tax preparation is made simpler, and the ability to email all of of my data to my accountant makes tax time much easier. When operating in more than one state, the accounting software can use multiple tax rates and simplify tax reporting. The decision to use a software-based accounting program makes sense for all business owners who want to spend more time working on their business and less time worrying about accounting.