(Credit: Zooey Liao/PCMag Composite; GettyImages)
Almost four decades after accounting software became accessible and affordable enough for small businesses to use it, the competition has never been fiercer. So, if you’re still managing your company’s money manually or are unhappy with your current software, you have no excuse for not finding something better. Of course, there are significant differences among the solutions we've tested. Based on my experience of using and writing about accounting software for more than three decades, I've compiled the essential points you need to consider before committing your business to any financial management solution.
This article was made possible in part by Intuit Quickbooks. It was written and edited independently without partner oversight.
1. Consider the Real Costs
Most accounting applications offer multiple versions that scale in price with features. Many promote deep discounts from time to time, too. You need to know the exact, non-discounted price of the tier that meets your needs. You must consider the long-term impact the actual cost will have on your budget. After all, once you invest time in setting up financial management software, you’ll be loathe to switch to another.
Subscription costs for accounting software vary tremendously. Patriot Software’s Accounting Basic tier, for example, goes for just $20 per month. At the other end of the spectrum, Intuit QuickBooks Online's Plus tier costs $115 per month. Zoho Books' Premium plan falls between the two, with a starting price of $70 per month.
If you’re doing your accounting manually, you might think you’re not spending any money because you’re using tools you already have, such as Excel or Word. (You might even still be using a pencil and paper.) But once you get up and running with accounting software, you will save countless hours on your financial work. That’s time you can use for the management tasks that help your business grow. Simply, you’re losing potential revenue by not automating accounting processes.
2. Take Advantage of Free Trials and Demos
Some accounting software companies offer free trials. Of the software we reviewed, only FreshBooks and Sage 50 Accounting don't. FreshBooks at least has a 30-day money-back guarantee, and you can request an expert-led product demo from Sage. You don’t have to enter all your financial data when you trial an accounting app. Just add some contact and product records and import a few transactions. Look at the available reports. Check out the mobile apps. Pay special attention to the user experience.
Some applications, like Patriot Software and Xero, give you access to demo accounts with sample data. Take advantage of this.
Don’t make your decision based on an app’s front-end website, though there’s value in looking at the pricing tables that specify what’s in each version. Feature descriptions and screenshots on the sites can be helpful, but those aren't substitutes for hands-on testing.
3. Verify You Don't Need a Midrange Solution
Our reviews focus on applications that target small businesses. You can find numerous definitions of that segment. For example, the SBA defines it as companies with fewer than 500 employees. For our purposes, we consider small businesses to have fewer than a dozen employees. But don't worry, these apps can accommodate hundreds of records and transactions, if not more. If you are worried about the limits of a solution you’re considering, contact its sales department for more information.
Companies that need more capacity and customizability should consider an enterprise resource planning (ERP) solution, such as Sage Intacct or NetSuite. These apps can handle advanced inventory needs across multiple warehouses and are more sophisticated in areas such as custom reporting, forecasting, and user permissions.
4. Evaluate the Extensibility
Even if your needs aren’t significant enough to warrant moving up to an ERP, you still need to make sure a particular site isn't lacking in a key area or two. The good news is that most apps offer add-ons for billing, payroll, and inventory tracking. QuickBooks Online and Xero provide the largest libraries of integrations.
5. Examine the User Experience
Accounting apps make your life easier in two ways. First, they make a complicated process with many rules easier for non-accountants to understand by using familiar language and handling the advanced bookkeeping tasks behind the scenes. They also make your financial tasks easier by building an intuitive user experience.
Every site we reviewed does a good job of the above, but some do better than others. QuickBooks Online, for instance, offers among the best financial tools in an especially understandable interface. But what appeals to one person might be too crowded or plain for someone else. You probably don’t look forward to doing your accounting chores, so you should consider how you feel about the user experience as a part of your decision-making process.
As we suggested earlier, you won't get a good sense of a site’s user experience unless you sign up for a free trial or demo account.
6. Check Out the Record and Transaction Templates
Small business accounting apps have record templates for customers, products, services, and vendors. You can select them from lists once you fill in their fields as you create transactions. This minimizes or eliminates duplicate data entries. All the services we tested support the basics, such as contact details for individuals and companies. They typically let you add accounts, descriptions, and prices for items and services.
Most go well beyond these basics. Zoho Books, for example, provides numerous custom fields and a map of your customers' or vendors’ locations. QuickBooks Online supports custom fields and payment information in customer records. It also allows you to track inventory in real time. If you can’t track what you need to about your contacts and the products and services you sell, you need to consider a different accounting app.
These sites also have transaction form templates in common. They let you customize and create estimates, invoices, sales receipts, and statements, for example. QuickBooks Online supports purchase orders and sales orders, too. Customization options vary among these solutions. You can always add a logo, change the interface colors, and (usually) adjust fonts.
Most give you control over at least some of the fields in forms. You might want to include a space for deposits and discounts, for example, or hide the shipping address. You don’t have to be a design whiz to make these changes; the apps make it simple.
7. Learn About Help Resources
As mentioned, accounting software companies have done a good job of making the complex process of GAAP-compliant accounting (the industry-standard system that accountants and businesses use) understandable. They do all of the required bookkeeping in the background and provide intuitive, friendly user interfaces and navigation tools.
Still, you might have some questions. These websites offer searchable databases of help articles, videos, and other support resources. Most have chatbots that can often answer your queries. Otherwise, you can contact the companies via chat, email, or phone. Some companies offer online communities, and both QuickBooks Online and Xero have certified advisors who can help you.
8. Find How Much You Can Do From Your Phone
Learning how much accounting work you can do on your smartphone might surprise you. Every option we reviewed provides mobile access—either dedicated apps (for Android and iOS) or mobile-compliant sites. The applications that offer demo accounts are also available on mobile. We evaluate the mobile experiences of these services in our reviews.
9. Explore a Company's Security Practices
Once you set up your accounting software, you will have a lot of sensitive information in your company file—not just your own but also that of your customers. You don't want to risk a hacker stealing all of that data. You also don’t want someone coming in and destroying the information you so carefully accumulated. Businesses have had to shut down because of accounting data breaches.
Accounting websites say they use bank-grade security. They support multi-factor authentication (MFA) and many other safety measures. If you want to learn more about a specific application’s practices, look for a link on the website that says something like “Security.” They all explain the lengths they go to keep your data safe. Here’s an example from Sage. We cover these practices in our reviews.
10. Think About Future Growth
If you plan to grow your business by adding employees or increasing sales volume, we advise you to stick with an accounting app that’s part of a family of products so it can scale with your needs. QuickBooks Online and Zoho Books, for example, have numerous versions. Moving to one vendor from another is very complicated, so you don't want growth to be the reason you have to make a drastic change.
Take your time making this decision. Your accounting system is the backbone of your business, and you want to find the right solution based on your current and future needs, as well as your user experience preferences. Read our reviews for more details on each service we mentioned, and be sure to reach out to the companies with whatever questions you have. Ask colleagues how they feel about their financial management system, too. Considering how many quality small business accounting applications are available, you should be able to find the right blend of features and usability.