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At the Small Biz Doer I’ve been doing extensive, in-depth reviews of online accounting software in an attempt to better understand what’s the best solution for small businesses. I’ll give you a hint, there’s no one best solution for every small business. Instead, the best software for you depends on your needs and how well the software can meet them.
For the comparison of accounting software I’ve measured all contenders with the same set of standards. To make it easier for you to see what I’m looking at when doing the reviews, I’ve listed the criteria used for the accounting software comparison below.
Even though there are 26 topics below with short summaries of why they are important, you may want more help in figuring out what to look for in accounting software. If that’s the case, please download my free “How to Choose Accounting Software” guide by entering your email address in the box below.
If there are any topics you feel are missing, please don’t hesitate to tell me in the comments section at the bottom of the page. If you’re looking to get in touch, I can be reached at firstname.lastname@example.org.
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- user interface
- accrual accounting
- double-entry accounting
- chart of accounts
- importing and syncing data from bank
- data import
- data export
- auto entry of data
- document attachment
- payment processing
- mobile app
- other features
- support / help documentation
- country it’s made in
- final words of advice
The usability of software is something that can get overlooked when strictly examining comparison charts or feature lists. There’s a difference between having a feature and having a usable feature.
The hard thing about comparing user interface is that it’s a personal thing. What one person deems a great interface another might find unusable. This is where I think trying out the software and seeing if it’s easy and intuitive to you. I realize that for some people they feel accounting software will never be easy and intuitive to them, so if that’s you, pick the one that makes you the least confused :)
User interface is an important feature. If you can’t easily use the software – whether it be because the placement of buttons and menus slows upi down or because there are too many steps in a process – then it may be not very useful to you.
The reaction time of online software is an important consideration, especially if you’re used to the responsiveness of desktop applications. It can also mean that entering information is faster in one accounting software over another because there are less steps to do the same thing.
Search / Finding Data
Being able to find your data easily is nice. This is actually quite an important feature since I find bookkeeping to be an investigative type of job. The more powerful your search capabilities, the faster you can work.
Tracking Changes / Undo Button
Being able to track what someone else has done is important for auditing and investigating how data was entered and manipulated. I use it more for those “how did this happen” (rather than “who did this”) moments, which enables me to fix these.
Another useful software function is the ability to undo a mistake or to redo something that you accidentally deleted.
Accrual accounting is like the grown up bicycle, while cash accounting is like the training wheels on a child’s bike. Eventually, you’ll want to (and need) to use accrual accounting. So can the software accommodate this?
You’ll probably find that most accountants and bookkeepers don’t like software that can’t do proper accrual accounting.
I consider this a core requirement of accounting software.
Having a general journal entry window lets someone who understands bookkeeping or accounting quickly add transactions and make modifications to the books. This is an extremely essential feature that your bookkeeper or accountant would be glad to have.
I consider this a core requirement of accounting software.
chart of accounts
In case you didn’t know, a chart of accounts is a listing of all your accounts (Income, Expense, Assets, Liability, and Equity). Some software I’ve reviewed doesn’t allow you to see your entire chart of accounts on one page. Something you should look for is if you’re able to freely change and create your chart of accounts. This is a basic need for accountants and bookkeepers.
I consider this a core requirement of accounting software.
Reconciliation, or the process of matching transactions in your bank statement to transactions in your accounting software, is a crucial step in the bookkeeping process. This is because it verifies the data you’ve entered into your books.
I consider this a core requirement of accounting software.
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importing and syncing data from banks
Being able to sync your bank data to your accounting data is one of the promises of cloud accounting. A lot of software that’s supported by the cloud has this feature. Unfortunately, though, this automatic syncing of data doesn’t always work. This issue has more to do with the bank than the software. This being the case, your accounting software needs to be able to manually import data as well. Being able to import bank data is a big time saver, since it allows the software to semi-automatically enter data and match records for you (I say semi-automatically, since you always need to verify the data being entered).
I find the ability to manually upload bank statements to be especially crucial, since your automatic bank connection can only import data from a few weeks, to at best, a few months back. This means the majority of people will need the manual upload process to work, if only at the time they are setting up their books.
This is an important, but not necessary, feature in accounting software. You can get by without this, but it’d be unfortunate if your software couldn’t import bank statement since it can save a lot of time.
Who likes manual entry? Well… no one, really. It’s the analog way to get into the digital world. More importantly, a lot of our information exists digitally, and the nice thing about digital, is that it’s easy to copy and move around. The ability to import data into your accounting software is something that is not only a nice-to-have, but increasingly becoming a must-have. Why spend hours re-creating and re-entering data (and introducing errors in the process) that already exists?
Most software imports limited data, so the ability to import data is kind of a bonus feature.
Data export is a big thing for me (and I suspect, lots of other people too), since I want to be able to take my data with me in case something happens (like the software company merges, goes out of business, or I decide to use another service). It’s also good for people who like to play around with their numbers in a spreadsheet. Lastly, sometimes you want to export certain pieces of data (like say your customers) into another software application like CRM software (Customer Relationship Management).
Most accounting software can export anything that it can create reports for. There are big differences in the export features of software, so check to make sure it can export data in a way that’s usable to you.
This is an important feature for accounting software, especially if you don’t know how long you’ll use the software.
auto entry of data
There are a couple ways to talk about auto entry of data. I believe most people relate this to the ability to connect to your bank (or upload a bank statement) and have your online accounting software automatically enter all the transactions for you. Remember that it’s not going to be 100% reliable, so you’re going to have to verify each auto-entered transaction. You’re also going to want to match your documentation (your proof) to that auto-entered data as well. Auto entry data is cool when it works. The second way you can think about auto-entered data, is how much your software remembers transactions that you manually enter, like what expense account and taxes are associated with a particular vendor.
The auto entry of data is a nice-to-have feature. It’s not necessary, but when it works well, boy does it make accounting way better (and dare I say funner?)
Reporting is the end result of bookkeeping that most people are eager to see. Once you generate reports, you can finally see how much money you made, how much people owe you, how much you owe people, etc… QuickBooks has advanced reporting functions with hundreds of stock reports, with each report having the ability to be customized, filtered, and memorized. Budgeting is nice for tracking goals vs. actual performance.
Most accounting software will provide basic reports (like profit and loss, balance sheet, accounts receivable, accounts payable). Not all can do budgeting. I find that reporting needs of small businesses vary greatly depending on the type of company.
Basic reports are a core requirement of accounting software. More advanced reporting is a nice-to-have feature.
If you’re in the United States, this section is probably not much concern to you. If you’re from countries like Canada, UK, and Australia this will be of great concern to you. This is because these countries have value added taxes, such as VAT, GST, HST. Value added taxes need to be closely tracked for items sold and purchased.
Sales Tax (value added tax) tracking for both sales and purchases is a core requirement for those outside the United States (and for some people within the United States).
Are you familiar with the terms “paper trail” or “burden of proof”? Both mean the same and they refer to the fact that you need to prove every transaction in your records. This is done most of the times through digital or paper receipts documenting your financial transaction. With this in mind, it makes sense to be able to attach this proof to every transaction, right? You can of course keep a digital or paper based record system outside of your software program, but I’ve found it incredibly useful to have the proof attached to my bookkeeping software’s record, since it now becomes very easy to double-check the document for something like a data-entry error.
This is a nice-to-have feature, but definitely not a requirement. Most accounting software doesn’t do document attachment, and those that do, only do it for certain type of transactions (such as for expense receipts).
Multi-currency is something that’s becoming ever more crucial in today’s business world. Many people sell to and buy from multiple countries and collect (or pay) in more than one currency.
If you deal with multiple currencies in your business, this will be a core requirement. If you don’t, and never plan to, then you could probably care less.
I don’t think I’ve encountered any software that can’t create an invoice. Some items that you may look for in invoicing are:
- How easy it is to enter invoices and the amount of details you’re allowed to attach to an invoice
- The look of the finished invoice (or invoice templates)
- The ability to track outstanding invoices in a simple way
- Being able to duplicate or memorize invoices, so that you don’t have to re-create the same invoice many times for different customers
- Send the invoice in multiple formats and in multiple ways (PDF, HTML, excel) and (email, print, link)
Those are just a few items to look for. Some programs definitely have more robust invoicing than others, so if invoicing makes up a large part of your time with accounting software, you’d want to make sure it can do this to your liking.
Invoicing is a feature all accounting software has, it’s a core requirement.
Payment processing is the ability to send an invoice out to a customer and have them pay via credit card, debit card, PayPal, or some type of online method.
This is a nice-to-have feature that you may or may not need. There are easy ways to live without payment processing, so this probably isn’t a deal killer feature for most people.
There’s special taxes and reporting requirements associated with payroll. Can the software handle this for you? If it can’t, is there a way to smartly input these? Being able to do your payroll through your accounting / bookkeeping software is nice if you have employees. Calculating payroll manually is doable, there are online calculators that can help you. However, the reason you want to use software for your bookkeeping is so that you donít have to do things manually.
This a core feature to some businesses, not even necessary to others.
Inventory has to be handled and accounted for in a special way, can the software handle this? Being able to track inventory is an essential function for any business that sells products that they need to keep track of.
Many businesses who have extensive inventory needs use different software for their inventory, so it’s probably not a core feature for most people. If you do inventory and you can find software that accommodates your needs, that’s a bonus for you. Accounting software that can handle inventory is limited, and of those that can do it, this feature can be quite basic.
The power of software is the ability to easily share and process data across various applications. You may currently be using software for CRM, payroll, invoicing, e-commerce, etc. Whether your online accounting software can import that data may be a crucial deciding factor for you. In other cases, sometimes your online accounting software won’t do everything you want it to do, so the only way to get a feature is to integrate your online accounting software with software that provides what you want.
This is a nice-to-have feature for most people. As time goes on, and integration gets better, I suspect the add-on integration of software will become more and more important. If you think about iPhone or Android smart phones, it’s the apps that really make the phone that much more useful. This can be the case for accounting software as well, where the software is simply the platform for your entire business management system.
It should be noted that any online accounting software can be accessed via your web browser, regardless of your device. However, when an online accounting software provider has a device specific app or a mobile version of the site, it’s designed to work well for that purpose. If you’re planning on accessing your books through a mobile device, check to see if what you’re about to buy is specifically designed for it.
Mobile apps are a nice-to-have feature, unless you mainly want to use your mobile device (smart phone or tablet) to do your bookkeeping. Most mobile apps are limited in functionality, so just because accounting software has an app, it doesn’t mean it’ll suit your needs. People are using mobile devices now more than ever to do their daily tasks.
This is a section that covers features or functionalities that didn’t get their own section.
Since I can’t say what these other features are, I’d say it’s a nice-to-have feature, but maybe I missed something that’s crucial to your business that you need your accounting software to do.
support / help documentation
Customer support is a crucial feature for some users, especially those who are not as comfortable with software as others. I tend to just look for documentation that already exists, since I don’t like waiting on support to potentially help me out. I’d rather see great help / documentation than great support (although I’m sure others would have their priorities reversed). Having information that is easy to access and easy to understand can save you tons of time and frustration.
This is a nice-to-have feature.
improvements / missing features
The important thing to consider when evaluating accounting software is to see whether it has the features or functionalities you need, and to decided if you can live with (or work around) the missing items.
country it’s made in
In some ways, the country where the software is made shouldn’t matter. However, I think for accounting software, it matters more than with other types of applications. This is because the people in their own country should (and emphasis on “should”) naturally design the software to fit the needs of their local tax and accounting requirements better than software made in another country. I’ve noticed this especially when it comes to taxes and payroll.
Price is always an important factor for businesses. One thing I think you should consider is how much does it cost you to not pay for what you need. Or in other words, how much time (whether it’s your “free” time or someone’s paid time can you save by using the software).
Whenever you read a recommendation, whether it be from me, your accountant, or another small business owner, just remember that the recommendation is from that person’s perspective. What’s important to them may not matter to you.
Some accounting software is easier to set up than others. Some also have better documentation. If you have no clue what you’re doing, I’d see if there’s either a person that you know that can help you or that the company’s promises of an “easy” set up and of “assistance” are true. My unscientific guess is that most small business people set their accounting software up incorrectly or in a way that’s not optimal for their business.
Final Words of Advice
One thing you should do is make a list of all the needs your business has that you expect your accounting software to fulfill. It should include must-have (core), important, and nice-to-have features. This will let you better judge what’s best for you.
Accounting software is also changing at a rapid pace, so make sure to check out the most current information. Reading a review from 3 years ago probably won’t be very helpful.
If you didn’t understand a lot of the terminology used in this article, I’d recommend downloading my free “How to Choose Accounting Software” guide. I go through some basic accounting and software terminology. You can get it by going entering your email address into the box below.
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