Q: How does accounting software work?
Accounting software records transactions and tracks different accounting metrics. You can set up the software to automatically receive financial information from your bank or use an extremely basic version that might require manually inputting the data. We encourage you to use software that automatically receives financial information from your bank and credit card provider to track your business's finances. Further, most software solutions store the information in the cloud, so your data will be secure and safe if your computer crashes or you experience other technical issues.
Q: Which small business accounting system is best?
Based on our research, QuickBooks Online is the best small business accounting system. But, depending on the specific needs of your business, another system may be a better fit or better value. For example, if your business provides a service and sends a lot of invoices, FreshBooks might be the best choice for you because of its robust invoicing features. See our best picks above for our specific recommendations for different business sizes and needs.
Q: What do you need from your accounting software?
You need accounting software that tracks the money moving in and out of your business, with both accounts payable and accounts receivable features. Some software solutions don't include both accounts payable and accounts receivable information. Also, accounting software should connect to your bank and credit card accounts and automatically download your transactions. If your business is service based, you may need project management tools. If your business sells products, you may want an accounting solution that has inventory management features. Last, look for software solutions that offer greater advantages by connecting to other business applications you already use, such as your point-of-sale system, customer relationship management system or email marketing software.
Q: Do you need online bookkeeping software instead of accounting software?
For small businesses, the term "online bookkeeping software" is usually interchangeable with "online accounting software." (However, there is a difference between bookkeepers and accountants.) The best online accounting programs for small businesses have bookkeeping capabilities that allow you to record debit and credit transactions, as well as accounting features that let you run reports and analyze your business's financial performance. Look for more than just a bookkeeping solution; accounting software should include more detail and let you generate invoices and detailed reports.
Q: Should your accounting software also act as an invoice generator?
It depends on your business. If you generate (or expect to generate) a lot of invoices to send to clients and customers, we recommend that you find a comprehensive accounting application with invoice-generating features. Freelancers should consider using accounting software that can generate invoices.
Q: What does an online accounting service do?
Online accounting services can perform a wide range of tasks for busy business owners. Some focus on bookkeeping duties, such as entering and categorizing transactions, reconciling accounts, and generating financial statements and reports that you can take to your CPA at tax time. Others provide payroll and tax preparation services. Some – such as virtual controllers, chief financial officers and CPAs – provide high-level accounting services, like internal audits and financial planning and analysis.
Q: How much should a small business plan expect to pay for accounting software?
For some small business owners, an accounting platform that tracks expenses and sends invoices is all that's needed. For others, advanced reporting, inventory management, and e-commerce are more important. The camp you fall into will dictate how much you pay for accounting software. Some accounting software options are free, while paid versions can cost as much as $25 per month, per user. The total cost of what you spend will be determined by the complexity of the software you choose and how many employees you want to have access to it.
Q: Should small businesses look for certain accounting software attributes?
Small business owners should look for accounting software that is easy to install, simple to use, easily integrates with third-party apps, and provides a bevy of features and functionality including invoicing and inventory management. The best accounting software enables easy collaboration between you and your accountant.
