When it comes to running your business, knowing your numbers is an absolute must. Good decisions come down to cold, hard numbers, and your numbers are only as accurate as your accounting processes. The right accounting software can make that process go much more smoothly. Unfortunately, the wrong software can make it unnecessarily complicated or lead to extra costs without extra benefits.
Here are six ways to choose the right tool for your bookkeeping and accounting needs.
Accounts that fit your business
At the core of your accounting system is the list of each separate account called the Chart of Accounts (COA). The importance of chart of accounts is that it keeps everything organized so you can easily find what you need and have an appropriate account for every transaction you’re likely to face. While there are some accounts common to almost any COA, you need to be sure yours takes into account the unique needs of your business. Most accounting software comes with pre-loaded COA options but should also have an easy way to add and delete or hide accounts so you can adjust your COA to fit your business.
The convenience of the cloud
There’s been a long-running debate over the benefits of cloud vs desktop accounting software. While there are some great desktop options—some with more robust features—cloud accounting tools have taken a clear lead in the last few years. The coronavirus pandemic has shown just how important it is to have flexibility to work from home should the need arise. Cloud software like QuickBooks Online, Sage, and FreshBooks allow your accounting team to work seamlessly from home or the office, whatever the day requires.
A balance of access and security
Having your accounting software accessed from outside of the office may raise security concerns, but modern cloud accounting software has security features that minimize the risks. In fact, cloud software can actually be more secure because critical data isn’t stored on-site where fire or power issues could cause it to be lost forever.
To make the most of security while still being accessible, make sure your employees follow basic computer security protocols. Your software’s features aren’t usually the issue; It’s more likely for you to have a breach caused by poor password hygiene, social engineering scams like phishing, or out-of-date virus protection. A quick primer on the basics will go a long way toward protecting your data and your team.
In addition to your internal team, you may also want to give access to an outside accountant, bookkeeper, or tax professional. This is another reason cloud-based software is beneficial. You’ll be able to grant access for these professionals to view or edit your accounts remotely without needing to come to your location and without sending any physical material out to them.
All-in-one or standalone?
In addition to choosing between cloud or desktop, you’ll want to decide between an all-in-one suite of tools or standalone accounting software. For many small businesses, standalone accounting software provides everything you need. It allows you to record transactions, generate reports, and make informed financial decisions.
If your business is bigger or more complex, though, you may be better served by an ERP system. ERP stands for Enterprise Resource Planning and includes several tools in one suite. While accounting is part of that suite, most ERPs also include software to manage HR, supply chain, and other key areas of the business. NetSuite and Oracle are two of the more popular ERPs for small businesses. Ultimately, if you don’t need an ERP, you’d likely be paying extra and adding unnecessary complexity. But if you do need those extra tools, having them all in one place and synced to one another can be a lifesaver.
The right tools for your industry
Along with the size and complexity of your business, you also need to consider if there are any industry-specific tools you’ll need to use with your accounting software. In some cases, these tools can be built into accounting software tailored to the industry. In others, you may need to find individual software applications that are compatible with your main accounting platform.
For example, medical offices need specialized software for billing and insurance processing. These tools are unique to medical practices and don’t exist in general accounting software packages. You may find that specialized medical practice management software has everything you need in one bundle. If not, make sure those billing tools—or the equivalent for your specific situation—will sync and work with your software.
Know your limits and seek guidance if needed
If you’re taking care of your own accounting, don’t forget to factor in your level of accounting knowledge. Some accounting software is designed to be user-friendly and clear. Other tools are designed for accounting professionals who have a deep understanding of the nuts and bolts of the accounting process. Choose software that matches your level of accounting skill to get the most out of it with the fewest headaches.
If you’re not doing your own accounting and plan to work with an outside accountant, consult him or her in advance before you purchase the software. They may have a preference or certain requirement to work with you and can help you select the perfect software for your needs, based on your unique business. You don’t want to get set up in one system only to find out you need to change to another in order to work with your accountant.
Putting it all together
The right accounting software for your business will give you everything you need and nothing more. It will allow you to run your business more smoothly and make more informed decisions without adding complexity that you don’t need or want. It will allow you and your team to access it when and where you need to without compromising your security. Taking the time to select the right accounting software will be well worth it in time, energy, and money moving forward.
