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How to Choose the Right Small Business Accounting Software

Choosing the right small business accounting software isn’t as easy as most people think. With the opportunity to cut overhead by up to 75.6% with the right small business accounting system, making the decision on which one is right for you can be critical. Do you know how to choose the right business accounting software? Check out our simple tips to help make your decision easier.

Choosing Small Business Accounting Software

1. Understand your business. What does your business do and what features do you really need to track all of your accounting processes. If you’re in retail, construction, or some other industry that has specific requirements for accounting, then you may be able to find an industry-specific solution, or even purchase add-ons for systems such as QuickBooks.

2. Do you need your small business accounting software to integrate with other business platforms? Are you using a CRM, ERP, POS, or some other system? If so, then you’ll want to find a system that integrates with those so you can simplify your business management. If you aren’t using those, but are planning to, then you may be able to find a more robust solution for your accounting that includes CRM or full enterprise management.

3. How much are you willing to spend? You can find accounting software at different prices, but obviously you’ll have a set number in mind that you’ll want to spend. Don’t buy into all the hype and purchase a large scale enterprise platform unless you really need it. Most small businesses can get buy with systems like QuickBooks , Xero or Sage Peachtree. Don’t invest in a large-scale solution like NetSuite or Oracle unless you have a complex business with several employees.

4. Don’t be afraid to go to the cloud. In today’s world, most software companies have starting taking their platforms to the cloud. Cloud and online accounting software packages will often have a pay as you go model that lets you pay a small monthly fee, and enables you to access the system anytime, anywhere. Additionally, using a cloud or online accounting system provides you with increased security from losing all of your data from theft or computer crashes.

5. Talk to business and software consultants. Just because you think you know the platform you want to use, does mean you shouldn’t look at other options available. Look around and talk to various vendors just to get an idea of what the different packages offer. Who knows, you may end up stumbling on a solution that better meets your business needs.

6. Create your feature wish list and take demos. Figure out exactly what features you need and create a list, after talking with different accounting vendors and seeing different platforms in action, you’ll have a much clearer understanding of which accounting system will be best for your business.

Features to consider when selecting accounting software for your business

Accounts receivable and accounts payable

Every good accounting system allows you to record both accounts receivable, or the money that your customers owe you, and accounts payable, or the money that you owe your vendors. Accounting software should help you manage your receivables more efficiently, which includes creating professional invoices, sending payment reminders, and using payment gateways to collect online payments. You should also be able to tell which customers have yet to pay you and how much. Your software should help you keep tabs on your payables, such as vendor bills and operating expenses, and offer reminders to make sure that you pay them on time.

Cash-based and accrual-based accounting

There are two methods you can use to do accounting for your business: the cash method and the accrual method. If you are a small business, and mainly record transactions based on cash inflows and outflows, the cash accounting method will suit you better. If you are a large business that buys and sells on credit, and records accounts receivable and payable, the accrual method will suit your needs. Many companies start out accounting with the cash method, and switch to the accrual method as the business grows bigger. Your accounting software should provide your business the option to choose between the two methods, and also make it easy to switch from cash to accrual if you wish to do so. Look for an accounting system that offers you both methods and the flexibility to choose.

Payment gateways

Payment gateways provide your customers a safe and secure means of paying you online. By integrating with payment gateways, you can offer multiple convenient payment options including credit cards, debit cards, and online bank transfers. As soon as a payment is completed through the gateway, the status of the corresponding invoice will be updated automatically in your system. There is a wide variety of payment gateways out there, and they all charge different transaction fees for your transactions. Once you’ve found your preferred gateway, make sure that the accounting software you’re considering connects to that payment gateway. 

Projects and time tracking

When you run a business that undertakes projects for clients, you’ll need accounting software that can handle project-based billing. You can bill your clients based on the hours actually spent on project tasks, or by setting a fixed cost for each project. If you bill on the basis of time, look for software that lets you track the time you spend on individual tasks and convert those timesheets into invoices. To prevent incorrect billing, make sure the system also lets you approve time records before you create invoices from them.

Bank reconciliation

Bank reconciliation is a vital part of your accounting. Look for accounting software that fetches your bank statements automatically. It should also let you set up custom criteria and bank rules that automatically categorize and match your imported bank transactions. This will allow you to reconcile accounts quickly and keep your business audit-ready. 

Tax readiness

Being tax-ready is one of the many benefits of having good accounting software. Your accounting software needs to be able to calculate your tax liability, work with multiple tax rates, and generate tax reports to help you comply with the tax rules laid out by your government. 


Automation is one of the most valuable features of accounting software, because it helps you accomplish more in less time. At the invoicing and billing level, you can automate recurring transactions, send out payment reminders to customers automatically, and auto-charge customers’ credit cards for recurring payments. Auto-scan is another feature of accounting software automation—it helps you capture data from receipts and turn it into transactions with minimal effort. Concentrate more on your core accounting by choosing accounting software that automates tedious processes and reduces manual intervention.


Integrations make your accounting software more flexible. They allow you to work with different apps without leaving your accounting platform. Changes you make in an integrated application are automatically updated in your accounting platform, removing the need for repeated data entry. For example, integrating CRM software with your accounting will link your customers’ information to your accounting system, and any update made in CRM will be reflected in your accounting app, so all your teams are on the same page. The accounting software you choose should be capable of integration with third-party services including CRMs, project management tools, and inventory management systems.


Monitoring the health of your business is vital. To keep track of your business’ performance, choose software that is capable of generating financial statement reports such as balance sheets, income statements, and cash flow statements. The software you pick should also help you generate reports for different accounting departments like accounts payable and receivable, inventory, projects, and taxes. These reports will tell you how you are performing in specific areas of your business, where you are doing consistently well, and which areas need improvement.

Choosing accounting software starts with your budget.

Before choosing accounting software, keep in mind that the cost of accounting software can range dramatically. The amount is often determined by the number of features the software provides. The more features within the program, the more it costs.

It’s important to understand how the price compares to available features when choosing accounting software. You do not want to buy overpriced software or waste money on features you will not use. Find out if the software offers a free trial or demo before purchasing. That way, you know exactly what features you’re getting before you commit to the software.

Accounting software companies have different methods for charging users. Some software applications are sold at a large, upfront fee. Depending on the software, you might have to pay additional expenses for updates.

With other programs, you pay a monthly fee. They are often sold in packages with a tiered pricing structure. If you choose software that charges a monthly fee, know the terms before subscribing.

Some companies require you to sign up for a certain length of time, while others allow you to cancel whenever. If you break a contract, you could be charged a fee with some software programs.

Check for additional fees associated with the software. Some companies charge extra for creating invoices, running reports, and providing setup, customer service, and data storage. The software might also offer services that you can add on.

Who needs to access your bookkeeping software?

Depending on the size of your business, you may only need a couple of people to have access to your accounting software, or you may need multiple users. If you run several businesses, you may even need software that can handle multiple businesses within one login.

With multiuser access you can ensure that everyone at director level can see what’s going on, but leave the day-to-day entry and invoicing to somebody else. You may want to find a package that allows you to give users different levels of permission, so you can control who is able to authorise payments or see sensitive information such as staff salary data.

It might not be only people within your immediate business who need access, if you employ an accountant or bookkeeper outside of your payroll staff, you may want them to have access to certain parts of the software too.

Are you limited to an office?

When you choose your accounting software, it’s important to think about how it will be used, as well as which features you need. If you have a full administrative office, it may only need to work in one location. However, if you’re managing the day-to-day from client sites or from home, you’ll need to know you can use your bookkeeping software from anywhere. Likewise, if you do work with an accountant and want them to have access, they need to be able to login from their own premises.

Cloud-based systems make this option a reality, and some accounting software programs offer mobile apps you can use to make quick payments or get an overview of your data at a glance.

Key questions you should ask:

When it comes to accounting software, the search begins by examining both the products’ features and the vendors behind the products. Because accounting software contains hundreds—if not thousands—of features, this may seem like an overwhelming task. While such assessments are not exactly easy, they are not overly difficult, because only a handful of features are critical to making the right choice—and we will focus on those features. In evaluating a package, here are the key questions you should ask:

  • Does the software provide customization tools?
  • Is the vendor financially sound and reliable, and can it provide the technical resources my organization will need?
  • Can the product deliver the type of financial reporting I require?
  • Will the underlying technology meet my current and future needs?
  • s the product’s account-number structure suitable for my business?
  • Since e-business has become so important, does the package provide Web integration?
  • Can it handle foreign currency?
  • Is it easy to use?
  • How much does it cost?