The first step is to make a detailed list of what you need the accounting software to do. Start with the most important function, and move down the list for the one that is least important for your accounting needs. Make sure you understand your hardware, for instance that you know how much memory you have available and what operating system you run.

Know What You Need

If you have some specific requirements, say for a type of report, it is better to find a business account software package that does the needed report as a standard item, as customizing will typically cost more. If there are accounting software programs specifically tailored for your industry, they may provide the best fit. While industry-specific software may be more expensive than generic options in the beginning, this type of small business software may save you time and money in the long run.

Once you have created your list of needed functions, you can use it to compare the accounting software that you are interested in buying. Make sure you also compare the cost of training, maintenance and upgrades, as well as if there is a charge for customer support. Once you’ve compared pricing you will know how much to budget for the first year based on what you can afford.

At the low end of the scale will be the generic small business accounting packages like QuickBooks  or Peachtree. At the mid range you will find small business accounting packages such as Microsoft Dynamics GP (formerly Great Plains) which also offers some business management options.

Often the small business accounting package that you need will be dictated by how many employees that you have. Some of the programs will handle tax reporting, payroll, supply chain management, project management, and more.

The more functionality the small business accounting program has, the more it will cost. But if it handles 90% of the items on your list versus 50%, it may be worth buying one that you don’t have to customize or that will force you to do many of the reports or activities by hand.

Some software has to be downloaded to your computer, and some accounting programs are available in online versions, that you need use of the internet to access. Think how this might affect the business in either way. The online version can be accessed at home, while one loaded on a computer requires access to that one machine or the network. But the online variety means you need an internet connection to get to it.

Online Comparisons

Compare small business accounting software online. Check out reviews on accounting society websites or industry specific professional associations. If you have questions about the software you can also post those in these locations.

There are also websites like PC Magazine or CNet that will also have comparisons. Check several websites to make sure you have an unbiased overview.

Typically accounting software will offer a free trial of their online program for a month or more. This will give you a chance to compare and play with several programs that you are interested in. You can check out how easy the accounting program is to use, and count and compare the steps to perform each function on different programs. Pay the bills and get samples of reports during your trial period to see if this software works for you.

Tips for Selecting the Best Small Business Accounting Software

Invariably you will have questions, so buy something well known and from a reputable, known firm. Otherwise you may not be able to find help when the time comes. It will also make it easier to find a bookkeeper or accountant who already knows the program.

You may want to hire an accountant for the first month or so to set up your business accounting system. Or set it up yourself and have an accountant review what you’ve done.

Learn to Use the Accounting Software

Once you’ve made the choice, make sure you learn how the program works and all its capabilities. Make sure you take the time to get trained, taking an online class, going to a training held by the store you bought it from, or see if the community college has a class you can take. The more you know, the more the best small business accounting software will do for your business.

It’s also a good idea to join an online or local users group that will give you an opportunity to ask questions and learn new applications and different ways of doing things.

There are two main options that can be selected from and then several options within those choices. The two main choices in accounting are hiring an employee and purchasing accounting software or paying an accounting firm to do the work. The differences between software and professional services are looked at herein and should help the small business owner make a decision.

In-House Accounting with Software vs. Professional Outsourcing

There are many difference in having an in-house accountant and hiring a professional accounting service to handle those tasks. Once these differences are understood, it will be easier for a small business owner to make a decision on which direction to move with their business.

Cost: The cost of using software and keeping accounting in-house must be compared to the cost of using a professional service. At first blush, many people think that hiring a professional company to handle the finances would be much more expensive; however, there are multiple expenses involved with having accounting software in-house and someone to work with the software and keep the accounting up to date. Some of those costs include:

Cost of the software: this can range from a few hundred dollars to several thousand dollars depending on how robust the software needs to be and how many features the business owner wants. Professional accounting companies tend to have the best software available and are usually able to provide documents to the business owner in whatever format is needed.

Training: This could be training involved in the software if the business owner is going to handle the finances or training a new employee on the software and the business practices. If the employee doesn’t work out, then there will be more money spent training another employee.

Employee Costs: Payroll, SS taxes, workers comp insurance, sick days, missed time that costs the company money and any other benefits that might be offered to the employee.

These costs can add up to substantial amounts of money. However, a professional service has these costs built-in and because they handle multiple accounts, the costs are not as evident or as high.

Risk: There are many different types of risks involved with accounting. First, no one is perfect and mistakes do happen. If the mistakes happen with an employee using software in house, the small business owner has to absorb those costs; however, when mistakes are made by professional services, they have to take responsibility for it and cover the money that is lost. These companies are insured for this type of mistake.

Another risk that can be cut is the risk of embezzlement. No one can provide 100% assurance that embezzlement won’t happen; however, professional services have insurance that will ensure any money that is embezzled is returned. On the other hand, when a professional service handles the finances, the small business owner has less of a hands-on role in the finances and must rely solely on the outside company to do things they way they want them to.

Laws: Professional service companies that specialize in accounting are often more up-to-date on tax laws and other changes that can affect the accounting department.

This can save small business owner money simply by not having to continually send their employee to educational seminars in order to stay on top of changes. However, many of the accounting software programs that are available today are able to keep up with changes through updates that are downloaded via the Internet.

Updates to accounting software programs are an important part of choosing the software. The program should be able to access updates on the Internet to keep the tax laws, payroll laws and other financial laws correct in the system so that the financials will be correct and the business owner won’t have to worry about tax problems and more.

Reliability: While having an in-house employee as an accountant does allow for closer monitoring of the billing and other financial tasks, it does not solve the problem of reliability. When someone is absent in a professional accounting firm, there is usually someone who can step up and fill in so that the work is complete. However, when the employee is an in-house employee, it can be difficult if the employee is absent, particularly if no one else in the business is able to use the software and fill in the gap.

Choosing between software that is used in-house and a professional services company is a decision that should be made after careful consideration of all the facets of each one. Ultimately, the choice will be one based on budget and how much oversight the business owner wants to have on the accounting.