It's finally here. The problem you've dreamed of having. The problem your jealous business school friends, your nay-saying family, and your competitors wish you didn't have. The problem your mentor calls "good."
Your small business has become too successful to continue accounting with Excel.
Congratulations on your problem. You need accounting software.
Choosing the right software isn't easy, especially for a small business. Accounting software is like marriage: it (usually) lasts forever. So it has to be a match for your business not only today, but in sickness and in health, and most importantly, as your business grows older.
Here are 4 tips to help you find "the one" accounting software your small business needs.
- Here's our list of the best tax software (opens in new tab) around
1. Look in the proverbial mirror and make a list
Arguably the most important, if mundane, tip is list your small business's accounting needs. Most owners have a general idea of what they want, but if you want to minimize cost then a specific list is key. Otherwise you end up paying for features you don't need.
Not sure where to start? First, pick the low-hanging fruit.
Take all the functions you are already doing with Excel/graph paper/post-it notes and put them at the top of your list. Things like invoices, inventory, and income and expense tracking. Then ask yourself who accesses, or will need to access, this information. (Sales staff, the bookkeeper, the accountant?) Check off the number of seats your new accounting software will need to support.
Now your list has its basic framework. And if you're a very small business who just needs the "basic framework" then stop here. Software like Wave or Zoho Books is probably the best fit for you.
But if not, it's time to determine what "advanced" features you'll need out of your accounting software. Use these three questions as a guideline:
What functions will help save time on employee management? What functions will help save time on customer relations? What applications and processes will the accounting software need to integrate with?
Let's go question by question.
Payroll, sick, personal and vacation day tracking are the most common employee management tasks a small business handles. Small businesses with significant head-counts should research dedicated human resources management tools and/or payroll processing services for these tasks, but for very small businesses, an add-on to their accounting software, like Deputy or Intuit QuickBooks Payroll, might be all that's needed.
Base your decision on the value such time-saving will generate for your business. Could the time spent on employee management be instead used to generate more revenue? If so, tasks like payroll should go on your list.
Customers will take note of your sales and delivery strategy, but they will remember forever how you present your bill. How you manage your accounting procedures says a lot about how you manage your customers.
Your new accounting software must maintain the goodwill you've worked so hard to build with your customers – and help you get paid faster too.
Do you want to generate invoices for customers right at the point-of-sale, wherever that may be? Then the phone-and-tablet functionality of FreshBooks (opens in new tab) might go on your list. Do customers want to pay without having to fill out repeat paperwork? Credit card processing with a program like Sage Payment Solutions (opens in new tab) should be explored. Are paper invoices getting lost in the mail? Consider an add-on like automatic recurring payments with InvoiceSherpa.
Evaluate each stage of your accounts receivable process, from purchase order to bank deposit, to see where software can clean up any inefficiencies. Cash flow is a top priority for a small business. You want accounting software to speed up payment, not slow it down.
Consider the applications you're already using to run your business. How would new accounting software integrate with those applications?
Maybe you're a retailer that needs its point-of-sale system to instantly give sales and inventory updates to accounting (Try Xero (opens in new tab). It integrates with a ton of third party apps.) Maybe you're a direct sales organization that needs customer invoices to post directly into your CRM. (Yendo could be the all-in-one program you're looking for.) Or maybe you're any business that just wants its old Excel files to load without wingdings infiltrating the spreadsheets. (The industry giant, Intuit QuickBooks, loves Excel – it should be everyone's first demo.)
Whatever you are, save yourself the pulled-hairs and check compatibility before you make a decision.