The Ultimate Guide to Choosing an Accounting System

Posted by
Anastasia Barytska

Updated August 29, 2024

Nowadays, the vast majority of businesses power their operations with some tool. It can be a help desk system or a dedicated communication line. Either way, companies accelerate their growth, improve product and service quality, and generally have a better time dealing with problems than those who aren’t using anything.

Yet, to make a system work, one must know what kind of tool your business needs and what features it should have. This is especially relevant for companies looking for dedicated accounting software for small businesses.

To find good business accounting software, you need to consider seven key aspects. Namely, offline or online, data protection, features, UI, scalability, migration options, and extra expenses. This is what we will be talking about today, and spoiler alert, this will be a lengthy one, so make sure you grab a cup of something cool cause we’re about to help you pick the best accounting software for small businesses.

Before we Start

As the title suggests, we’d like to let you know that the things we are about to list aren’t ubiquitous across many different accounting software for business. They aren’t as they are meant to help you pick the right system. If you feel like your business can survive without a particular feature, or maybe you can stomach the extra expenses, then more power to you.

Offline or Online

For many, this might seem like a redundant question, but it is an important one nonetheless. You should know from the get-go what kind of system you want, but if you are still undecided, here’s how things roll today and will in the foreseeable future.

To sum up, both online and offline systems are equally used and popular. However, no matter how similar they might seem, they have a few key differences, or rather advantages, that we must discuss.

Offline Advantages

Offline software, as the name suggests, will work without any internet connection, which is something we cannot say about online. This is a major benefit for companies that work in areas with a poor connection.

Another benefit is that your offline accounting software for business will have more granularity and customizability. In other words, you can expand your system at any given moment without having to rely on the vendor. Whether you are implementing new add-ons or connecting it to a proprietary tool, offline systems are better for such things.

Yet, before we start discussing online systems, we cannot skip that offline systems have their own disadvantages. One such issue comes from the fact that you are the one who will take care of the hardware that is powering your business accounting software. Secondly, even the best accounting software needs manual updates if running it offline. All this will fall on your shoulders.

Online Advantages

With the world shifting towards cloud technology, any online accounting system for small businesses will eliminate the need to install anything. The second benefit is that you won’t need to do manual upgrades as the vendor handles all changes and updates.

Then there is the fact that you can access your tool from anywhere using any internet-enabled device. Whether it is your smartphone or your laptop, you can add transactions when the page is loaded.

You don’t need to manage any hardware, as everything is done remotely. Your data is also more secure, and you can easily (sometimes not) integrate the accounting system with third-party apps.

But just as with offline systems, a few things might deter you from using an online accounting tool. Namely, you have zero control of your system. If you want to expand, you’ll have to pay more. If you're going to add custom functionality, tough luck. Finally, if your network connection is poor, you will experience disruptions in your workflow.

TLDR.

Both systems are viable and often offer the same set of functions. It all depends on your current internet coverage and willingness to deal with hardware or be limited to a certain set of features and integrations.

Data Protection

Next on the list is data protection, and this is a major one. As a business, you take full responsibility for the data your customers entrust you with. If you get a data breach, consider your credibility and trustworthiness lost. Thus, make sure your solution of choice offers the following things:

• Learn how the vendor stores its data. You can find this info, usually at least, on the company’s website. However, there are cases where this data isn’t available for security reasons. In that case, learn this information from the company representatives. Additionally, if the company uses its servers, clarify what kind of security measures it implements.
• If you are from the EU, you might also want to see if the company is GDPR compliant. This will ensure that you and your customers can access your information anytime.
• Learn what kind of web programming technology they used to develop their solution. Alternatively, you might want to check whether the site has HTTPS. If you don’t know how to do it, just open any modern browser (Chrome, for instance) and see if there is a lock icon at the top left corner near the address bar. If there is one, this means that the site uses encrypted data transfers, meaning your or your customer's info isn’t viewable by hackers.

Typically, the best business accounting software has three of these and more. However, you cannot expect these features and characteristics using the system locally or offline.

Key Features

And now for the feature sets. Each vendor goes up and above to deliver the best bang for your buck. Many offer unique functions that you might or might not use. What this means is that all this can be overwhelming for a newcomer. To help you combat this, here’s a list of functions that your tool absolutely must have.

• Create invoices and customize the look and feel
• Track expenses according to categories
• Manage and track inventory, inward-outward stock movements, and waste
• Perform bank reconciliation by importing bank transactions
• View account payables & receivables
• View, edit, and copy balance sheets, profit and loss statements
• Create purchase orders (PO) and record inventory purchases
• Offers the ability to manage taxes
• Track Journal Voucher entries
• Manage a list of customers & vendors
• Offer trial balance reports
• Add extra team members

If all of these are met, then you have found yourself an accounting software for small businesses that’ll even work in larger companies. And in case you are wondering what kind of functions it would be nice to have, then here you have it:

• Will work with multi-currency (including transfers, transactions, etc);
• Offers the ability to categorize transactions on a per-user, per-project, and per-brand basis;
• Manage employee payrolls separately from customers;
• Provides a version-control module;
• Has automation options.

User Interface

Many accountancy software reviews chose to skip the user interface section. We believe that it is integral to the experience. After all, a tool is only so good if you can use it. Imagine if it would take years to learn how to use a shovel. The same goes for small business accounting software, especially if you are petite.

If your tool is packed to the brim with a function your team doesn’t know how to use, you are wasting time. Wasted time means wasted money. Furthermore, suppose you decide that you can teach your staff to use the system. In that case, you must factor in the downtime of your current financial operations and consider the expenses associated with the learning process.

It all adds up. In our books, a tool should be easily accessible for someone who doesn’t have an accounting background. As a business owner, you should be able to scroll financial data within the tool with at least a basic understanding of how such systems work.

Scalability Options

We’ve covered features, talked about security, and learned about the UI, a thing or two. Now, it is time we talk about scalability. If you are looking for the best small business accounting software, chances are your business is growing, and you plan to maintain that phase. If so, then here’s the thing: your system of choice should have at least some wiggle room.

Essentially, your tool should have clearly defined and easily accessible tariff plans. Start by looking at the lowest price and aligning its offerings with your needs. Once you’ve found a tool with the right number of features, see if there is at least one plan ahead. If there isn’t any, make sure you learn about potential scalability from the vendor.

You don’t want to be stuck on a single plan, as this will limit your productivity and damage your competitive edge. It will force you to migrate to another system, which leads us to the next section.

Migration Options

A tool is only so good if you can use it with your old info. Rarely a company starts its journey using a dedicated accounting system. All financial operations are typically done using local tools such as Microsoft Excel or Open Office. All this means that you probably have a ton of CSVs and XMLs lying around.

This is all data, and you will most likely need it to start your work effectively. Make sure that your financial system has a robust import system. If not, which is more likely, by the way, you can opt to use a third-party app to migrate your accounting assets. Keep in mind that such solutions are usually paid options, but they will be able to move not just raw numbers but other info as well.

Also, word of advice: We suggest that you avoid using free migration systems, as these will most likely not work and will put your records at risk. You can’t be sure who will use the data, and you can’t be completely positive that it won’t be stolen outright.

Extra Expenses

And last but certainly not least, we have extra expenses. This is something that can pop up unexpectedly and can catch you off guard if left untouched. So, when picking accounting software, carefully study what product price you get. We mean to see if any add-ons are necessary, whether the vendor charges any account maintenance fees, etc.

All these mini-expenses might seem small and insignificant, but they can stack up and result in a higher price, which your budget might not be ready for. Knowing this will allow you to factor them into the end price and act accordingly.

Bonus: Aftersale Support

We couldn’t skip this aspect, as it is just as important as the other things we’ve talked about. Ideally, your product of choice should come with a robust support suite. What we mean is that you, as a customer, should have access to a powerful knowledge base where all the nitty-gritty details are outlined, and you should be able to contact your vendor using any communication channel you like.

Another thing to consider is the response time. You can check this by tapping a small but very specific question (so that a bot wouldn’t answer it) in the chat window. See how long it takes the salesperson to respond and, based on that information, make an informed decision.

Finally, avoid super cheap tools as often as possible. They don’t have a support service, and obviously, you’ll need one down the line.

Bottom Line

There are many accounting software for small business reviews, and this topic has been covered to death, but we still feel that we need to stick to our five cents. This guide will help you focus on essential things an accounting system should have. It is in no way meant to be your step-by-step tutorial. But that’s all from us. Be sure to come back soon, as we post interesting articles like this all the time.

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