Choosing Accounting Software

Choosing accounting software is a bit like playing Clue. The answer is out there, but you don’t always know where to begin or what questions to ask.

Luckily, we do. The following twenty questions are designed to help you decide which software is best for you, regardless of how far along you are in the search for the perfect accounting solution. We’ll help you determine what you’re looking for in an accounting software program and help you evaluate different software options so you can find the best accounting software for your business.

Let the games begin!

10 Questions To Ask Before Choosing Accounting Software

These ten questions will help you pinpoint what you need in an accounting software. By narrowing down your business’s specific needs and requirements, you’ll be better able to find the perfect accounting software for your business.

1. What Works About My Current Accounting Process?

It doesn’t matter whether you’re already using accounting software or simply relying on a calculator and a spreadsheet; either way, it’s important to consider what is working about your current accounting process before making a change. What features do you love about your current software program? Does your self-designed Excel spreadsheet give you something that makes it easy to keep your business organized? Maybe you have a note-taking methodology or a reminders system that keeps you on track. Or maybe you like to manually reconcile your bank accounts so you can feel in control of your finances.

Your new accounting software should address, meet, and/or exceed all the aspects you like about your current system; it’s vital to hang on to the things that are already working well. (If nothing is working for you right now, you’re in the right place. Read on!)

2. What Doesn’t Work About My Current Process?

I’m sure you saw this one coming. It’s time to think about what isn’t working with your current process. It could be that your software slow and outdated, or your overstuffed receipt shoebox is driving you mad. Your company may have simply outgrown spreadsheets and paper ledgers. Worse, you may not have a working accounting system at all. Think carefully and specifically about what isn’t working. Make a list if you have to, and use this list as a jumping off point for your accounting software search. When you truly understand what is working and what isn’t, you will be able to find an accounting solution that addresses problems but also leaves well enough alone.

3. What Type Of Small Business Do I Have?

Believe it or not, all accounting software is not created equal. Each program is designed with specific business types and sizes in mind. It’s important to consider the unique needs of your business and your industry so you can better understand which software will best fit the bill. For example, a freelancer will have very different needs than a business owner with 50 employees.

Also consider this: some software programs are designed for accrual accounting while others are meant for cash basis accounting. Which method of accounting do you use right now? Which method would you like to use? (Read our Quick Guide To Accounting Terms And Concepts to learn more.)

4. Where Do I Want My Business To Be In One Year? Three Years? Five Years?

Let’s say you’re a mom who is launching a small side business to bring in a little extra cash. You’ve started out by baking for friends in your spare time, but when your kids move to college in a couple years you plan to grow enough of a clientele to open your own bakery.

You could go with an incredibly basic accounting software right now, which would likely be enough to address your modest needs. But in two years’ time, you might outgrow it entirely. Then you’d have to start the search for an accounting software all over again.

It is important to consider your future business plans as well as your current needs. That way, you can choose a software that will grow with you as your business does. If you already know you plan on staying at the same level for five years, that is great too. Simply having a plan will make it easier to decide which features you need from a potential accounting software.

5. Which Features Do I Absolutely Need From An Accounting Software?

This is probably the question you thought I would ask from the beginning—and with good reason. You choose an accounting software for its features more than anything else.

In previous steps, you’ve thought about your current accounting process, your type of business, and the type of business you want to become. Now, which features do you need to achieve this?

If you don’t know much about accounting software, that can actually be a hard question. Let me make it easier for you by giving you a comprehensive list of the many common accounting software features you have to choose from:

  • Invoicing
  • Recurring invoicing
  • Custom invoice template designs
  • Snail mail
  • Quotes/estimates
  • Client portal (see Zoho Books)
  • Contact management
  • Lead management
  • Vendor management
  • Request customer reviews
  • Expense tracking
  • Receipt scanning
  • Separate personal and business expenses
  • Live bank feeds
  • Bank reconciliation
  • Chart of accounts
  • Manage bills
  • Project management
  • Job costing
  • Time management
  • Payroll
  • Direct deposit
  • Inventory
  • Class tracking (see QuickBooks Online)
  • Reports
  • Budgeting
  • Track mileage deductions
  • Sales tax capabilities
  • Tax support
  • Thank you notes
  • To-do lists
  • Packing slips
  • Purchase orders
  • Sales orders
  • Journal entries
  • User permissions
  • Print checks
  • Multi-currency
  • Multi-language
  • Multi-company
  • Import/export capabilities
  • Mobile apps

6. Which Features Do I Want To Have If Possible?

One of the best parts about a good accounting software program (and one of the reasons you may be looking for one) is all the time saved. Accounting software is supposed to make your life easier, not harder. That’s why in our accounting software reviews, the more automations offered, the higher the rating (generally). What features or automations are on your wish list? What extras would you add if you had your druthers? You may need invoicing for your company, but you may want the ability to send recurring invoices. You may absolutely need expense tracking — but it would save you a lot of time and frustration to find a software that also provides receipt scanning.

Everyone’s automation wish list is different. Yours might include automatic bank transactions, custom bank rules, auto schedule invoices, batch invoices, default email messages, default terms and conditions for invoices, auto reminders for customers with late payments, recurring bills, auto reminder for bills, and/or low inventory reminders.

At this point, I would go back to your list from earlier or create a new one which allows you to record both the features you want and the features you need. When it all boils down, you’re going to shoot for a software that checks all the boxes…but it helps to know which features are optional and which are deal breakers for your company.

7. How Much Am I Willing To Spend On Software?

This is the kicker for many businesses. Luckily for you, there are software options in all prices ranges — including free. Sit down with your records and/or advisors to discuss how much you are willing to spend on your software every month (or every year if you go with a yearly subscription plan or locally-installed software). We’ll cover what price ranges to expect in just a bit.

If you are a small startup that can’t afford to pay for accounting software at all, don’t worry. Free SaaS solutions like Wave have got you covered.

8. Do I Want A Cloud-Based Or Locally-Installed Software?

Another important factor when considering accounting software is whether you want web-based software or locally-installed software.

  • Web-Based: Software hosted in the cloud that offers mobility and is generally accessible on any browser or device (including iPads and smartphones).
  • Locally-Installed: Software that is downloaded and installed on a single computer (though some programs come with the option of multiple installations).

While the cloud is definitely the big new thing for accounting software, some people just prefer locally installed software. For more help deciding between the two, read our blog Accounting Software: Cloud-based or Locally Installed?

9. Do I Need/Want To Keep Any Current Integrations Or Payment Gateways?

If you’re currently using software, you are probably already attached to certain add-ons or payment gateways. If so, make sure your new software is compatible with these.

This is a good time to note that, if you are transitioning from one software system to another, you should take a look at the potential new program’s importing and exporting capabilities so you can be sure your preexisting company information transfers over nicely.

10. What Should I Do With All This Information?

Now that you’ve done some preliminary thinking about the type of software you are looking for, it’s time to commence the hunt. Grab your list, hold on to your seat, and begin researching your accounting software options.

If you don’t know where to start, take a look at this blog series…

…or check out our accounting software comparison chart below:

 Best SMB Accounting Software Best Accounting Software for Larger Businesses Best Free Accounting Software  Best Accounting Software for Invoicing  Best Accounting Software for Accountants
QuickBooks Online Xero Wave Zoho Books QuickBooks Pro
QuickBooks review
Wave Accounting for small business review
QuickBooks alternatives
Read Review Read Review Read Review Read Review Read Review
Visit Site Visit Site Visit Site Visit Site Visit Site
Price  $15 – $50/mo  $9 – $180/mo $0 $2 – $29/mo $299.95
Accounting Method Both accrual and cash-basis Both accrual and cash-basis Accrual Both accrual and cash-basis Both accrual and cash-basis
Web-based or Installed Web-based Web-based Web-based Web-based Locally-installed
Highlights Robust Feature Set
Easy to use
Beautiful UI
400+ integrations
Strong reputation
Unlimited Users
Robust features
Good customer service
500+ integrations
Personal and business account management
Beautiful invoicing
Supports multiple companies
Good customer service
Competitive pricing
Easy to use
Unbeatable invoicing
Beautiful UI
Great client portal
True accounting
Robust feature set
Hundreds of reports
Strong reputation

Once you’ve come up with a few contenders, or think you’ve settled on a good software, continue on to the second half of this article, which helps you evaluate accounting software options and choose the best solution for your business.

10 Questions To Ask When Evaluating Accounting Software

At this point, you should have a few more clues about the type of software you need — but we’re not done yet.

These next ten questions are designed to make sure the specific software program(s) you’re considering meets your needs. We will cover how to make sure the software company you eventually choose is reliable and trustworthy, and how to know that you’re getting the best deal for your money. By question 20, you should have all the information you need to select the absolute best software for your small business.

11. Is It Accounting Software?

Just because a company calls its product accounting software doesn’t make it so. A program must meet a few requirements in order to be considered true accounting software:

  • Double-Entry Accounting: In double-entry accounting, every transaction is recorded twice–once as a credit and once as a debit. If the program you’re considering doesn’t offer double entry accounting, it isn’t really accounting software. To learn more about double-entry accounting (and its importance) read our posts The Quick Guide to Accounting Terms and Concepts and What Is Double-Entry Accounting (And Do You Need It)?
  • Accounting Reports: Certain reports are integral to true accounting software, including Profit and Loss, Trial Balance, Balance Sheet, General Ledger, Aged Payables, Aged Receivables, and Journal Entries.
  • Chart of Accounts: A true accounting program will also have a chart of accounts.

For business owners looking for a real accounting solution, these things are 100% necessary. That said, for freelancers, micro businesses, and some small businesses that simply require light bookkeeping features, the above features may not be as important.

12. Does It Have The Features I Need?

If the answer is yes, pass go and collect $200.

If no, it’s back to the drawing board. Hit the books again!

13. Does It Have The Features I Want?

It’s time to pull out that list of wants — features you don’t strictly need but would enjoy having. If the software you’re considering covers these, congratulations! If not, there are only two things you can do:

1) Let your dream wishlist go and be content to settle for the features you need.

2) Add the features you want to the list of features you need.

Before you say that sounds like cheating, hang with me for just a second.

I am a pretty indecisive person. Someone once told me to assign two options to either side of a coin and flip it (knowing me I was probably trying to decide between a caramel mocha or vanilla latte, or something equally banal). She didn’t specify whether heads or tails would win the toss; instead, she said that if I felt disappointed with the result, then I had already made my decision.

The same concept applies here. If you feel crushed at the prospect of losing a feature you previously considered optional, then you need that feature. At least in my book.

14. Does It Offer Integrations Or Add-Ons To Make Up For Missing Features?

Don’t throw the baby out with the bathwater; before you reject a program for not having a feature you want or need, consider the possibility of integrating with a 3rd-party solution.

Want a non-hypothetical example? Let’s say that you fall in love with QuickBooks Online but need a more developed time tracking feature. All is not lost! In this case, an integration with TSheets may allow you to kill two birds with one stone.

It’s important to note that many integrations and add-ons come at additional cost, so take this into consideration as well.

15. Is It Affordable & Scalable?

Small businesses should be able to get a good, full-featured software for around $20-35/mo. For larger businesses with multiple users and payroll, pricing plans will range from $35-$50/mo. If you are paying more than this for an SaaS solution (locally-installed software and FINSYNC excluded), you would probably be better off going with another program.

On the other hand, if you are paying less than $20-50/month, make sure you are actually getting your money’s worth. Many companies’ smallest plans offer fewer features and more limitations (with the exception of Wave’s forever-free pricing structure); in these cases, by spending just a bit more per month, you can have a much better value for your dollar.

If you have plans to grow your company, make sure you choose an accounting software that can grow with you. You can tell a software is scalable if it offers multiple pricing plans and doesn’t charge an outrageous amount for additional users. (Xero is a great example of a scalable solution.)

If the software you’re considering has held its own with the last five questions, it may be tempting to jump the gun and sign your soul away right now. Don’t be hasty! The answers to these next five questions are incredibly important when determining whether your software company of choice is reliable (and if your personal data will be secure). Before you make any final decisions, please give careful thought to the following questions and do your research. I promise it will be worth it.

16. Will My Data Be Secure?

This should be one of the most important questions you ask, particularly if you’re looking at cloud-based software. You want a company that is upfront and specific about their security. Otherwise, they may be hiding something.

Safe, reliable companies will generally take the following security measures:

  • 256-bit SSL encryption
  • Firewalls
  • Regular data backup
  • 24/7 surveillance
  • Intrusion detection
  • Multiple data centers
  • Other physical security measures

If you are concerned about the security of the company you’re considering, do a little digging. Each of our accounting software reviews contains a detailed section on security, and our blog contains multiple posts about SSL encryption and cloud security as well.

17. What Are Other People Saying?

Find out what existing customers like and dislike about the software; this can be a great indicator of whether or not a company is reliable and worth using. If you see specific positive feedback that addresses your own wishes and goals for a prospective accounting software, you’ve probably found a good one.

Complaints and negative reviews are inevitable, but if/when you encounter negative reviews, make sure the company’s customer service has addressed the issues in a timely manner — that is generally a very good sign. If you’re seeing a pattern of problems where the company has not been quick to respond, I would begin to look elsewhere.

Common review sources I turn to include G2Crowd, TrustRadius, Complaints.com, and GetApp.

18. Is There Good Customer Support?

I’ve had to learn and master dozens of new software programs, so trust me when I say you don’t want to get stuck with bad customer service. A good accounting software company will hire friendly and knowledgeable representatives and provide as many avenues of support as possible—phone, email, Help Center, live chat, video tutorials, Knowledge Bases, blogs, social media, etc. The more the merrier.

19. Is The Software Updated Frequently?

Frequent updates are the sign of a growing, thriving company. Stagnant software is not a good omen, and tends to mean that company isn’t doing well, their focus is elsewhere, or they don’t care about their product—all of which put you in a bad spot.

Company blogs, archives, and roadmaps are a good place to track updates.

20. Do I Like Using The Software?

In the end, this is the most important aspect of choosing accounting software. Do you actually like using the software? If you don’t like it, you won’t use it. Simple as that.

It is beyond imperative to take the software you’re considering for a test run. Nearly all companies offer a free trial that you can access, no strings attached.

When you’re testing the software, ask yourself the following questions: Do I like the organization of the software? Is the design of the software aesthetically pleasing?

It seems silly, but these things really do matter. Ugly colors and clumsy layouts have ruined many an otherwise great software program. Your gut feelings — even about something as mundane as color schemes — reflect your values and can reveal what’s important to you.

Personally, if a software doesn’t provide appealing, professional invoices with lots of customizations options, then I usually don’t like it. I have always been very into design, and I like to be in control of my invoicing. I want software that allows me to change the colors and font of an invoice template. Everyone values different things, though. Project management tools or tax features might be the hills you want to die on.

Ultimately, it all comes down to what you like and what will work best for your business.

I hope this article has been helpful and that you are more prepared than ever to choose the perfect accounting software program. If Merchant Maverick can assist you in any further way, please let us know. Happy hunting!

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