The right bookkeeping software saves hours of time, reduces, or eliminates redundant data entry, whilst making it much easier for you to track your business’ financial health and monitor incoming and outgoing funds.
It also allows you to create invoices, track expenses, and generate a variety of reports that help you analyse your business’ performance from various angles – depending on the system, the possibilities can be endless.
But with so many different bookkeeping software options out there, it begs the question: How do you know which bookkeeping software is right for your business?
If you are a sole proprietor with no employees, little or no inventory and a handful of customers, you may only require a very low-priced system, or you may not even need bookkeeping software at all.
Have a larger business with inventory and employees? Chances are you will require a very different type of software and the expense that will come with it.
As Virtual CFOs and bookkeepers, we have spent years analysing, researching, and utilising different types of bookkeeping software.
Let us share with you, our top tips for choosing the right bookkeeping software for your business.
Identify your needs
Prior to looking into specific bookkeeping software packages, it’s important to identify your needs.
You can identify the needs of your business by asking yourself questions such as:
What are your business objectives?
If one of your business objectives is to hire employees soon, then your bookkeeping software should include a payroll feature.
Who is going to use the software?
Is it just you using the software? Or do you have staff who will be using the software too?
If so, ensure the system is user-friendly and that staff will be able to complete the required tasks on the system.
What type of financial information is crucial to running my business?
As well as helping you comply with tax laws, bookkeeping software provides financial information to assist you in the running of your business.
If you’re a retailer, instant access to stock reporting may be crucial financial information for you.
What bookkeeping tasks do I need to perform?
Think about all the tasks you will need to perform.
Do you need to track inventory or report on individual job profitability? Will the software be able to handle them all?
Does my business have any special needs?
Bookkeeping software is not one size fits all. Which software you choose will depend on your individual situation and business.
Let’s say you trade internationally – can the software handle foreign currency? This is a special need and not all bookkeeping software will be able to manage it.
Think about the features
Like with anything, there is no point paying for a feature that you aren’t going to use, let alone need.
So, now that you’ve identified your needs, what features will you need to go with them?
Basic accounting features are ones like invoicing, income and expense tracking, financial report generation and customer management.
It is likely that all small businesses will require these features, if not more.
Time saving automation
Time saving automation features are available and include automatic sending of recurring invoices and automatic purchase order creation for inventory.
If you don’t need or want to send recurring invoices and don’t purchase inventory, then it’s likely you won’t require these features.
Tax preparation features such as automatic tax calculations, multiple tax rates and tax reporting, help make the lives of you and your Accountant easier.
As there are many legal requirements surrounding tax, we recommend that all businesses look at the tax preparation features.
Have staff? Then you will require payroll features.
If you don’t have any staff or don’t plan on hiring staff any time soon, then you won’t need to bother with these.
Third-party program integration
Third-party program integration can make it much easier to run your business.
If you already or plan to use apps and programs such as Receipt Bank to scan in your receipts and invoices, then it’s important to ensure your bookkeeping software can integrate accordingly.
Consider the costs
Cost is a factor for all of us and bookkeeping software varies in cost depending on type of software, the number of features included, as well as many other factors.
Some points to consider:
Is it an annual or monthly fee? Or can I choose between both?
Many bookkeeping software companies offer cloud-based software as a service rather than software licenses and charge a monthly subscription fee.
Whether you decide to pay monthly or annually, it’s important to choose a bookkeeping software you can afford.
Do I need to pay an annual fee to receive ongoing technical support?
You may need support when using your software and this can often be a ‘hidden cost’.
Factor this in when deciding on your choice of software.
Am I required to regularly update the software?
Some bookkeeping software requires updating regularly and this may cost you.
Do I have to pay for software training?
When using new bookkeeping software, chances are you and your staff will require training to use it. This is often another ‘hidden cost’.
Trial for usability
Great bookkeeping software is for every day small business owners, not Accountants, making it easy to use. Finding out whether the software will be easy to use, prior to purchasing is important.
Most bookkeeping software programs offer free trials, helping you find out things like:
Can I tailor the software to my needs?
To suit your individual needs and ensure a user-friendly experience, the option to set defaults, add new fields and to customise screens and documents is essential.
Can I easily and freely import and export my information?
Without the ability to easily and freely import and export your financial information, you will be unable to perform the tasks you need to or gain a clear picture of your business’ financial situation. Therefore, it’s important to test the usability of this feature.
Can I use the software anywhere?
One of the great advantages of new and improved Cloud bookkeeping software is that you can access it anywhere.
Some software has apps you can upload to your phone too, allowing you to check on your business financial data anywhere, anytime.
At proCFO, we are Perth bookkeepers too and have spent years analysing, researching, and utilising different types of bookkeeping software. There’s so much to share we couldn’t possibly fit all our tips into one blog!
Look out for part two of our ‘Top tips for choosing the right bookkeeping software for your business’ soon.
Contact us today to find out how we can help you choose the right bookkeeping software for your business.