How to Choose Business Accounting Software
                     How to Choose Business Accounting Software?
As your accounting data grows, as well as your backup procedures and storage
media will need to evaluate the age of your system.
It used to be that keeping “the books” for a business was literally a paper-based
process, involving a ledger, lots of columns, and a pencil to record a business’
essential financial data. In the digital age, however, even the smallest business
can benefit from a wide variety of small business accounting software products
on the market. Accounting software can not only help you reduce human errors
in your calculations, but it can help you gain insights into your business that you
couldn’t see in paper form — such as generating sales forecasts for the next
quarter,  determining which items are overstocked, and pinpointing your least
profitable service.
Business  accounting  software  can  be  the  source  of  all  this  information.  But
finding  the  best  accounting  software  program  for  your  business  can  be  a
challenge,  with an explosion of  shrink-wrapped software products  and online
application  offerings.  In  order  to  choose  a  business  accounting  software
program, you need to understand some business accounting basics, take a good
look  at  your  business  and  its  accounting  needs,  and  assess  the  products
available today.
“It’s  really  important  to  get  this  right.  In  a  lot  of  cases,  it  can  make  the
difference between businesses that are profitable versus not profitable,” says
Mike Budiac,  president of  Find Accounting Software,  an independent website
affiliated with CPAOnline. The website allows you to complete a two-page survey
about your software needs which it will match to qualified vendors. “I think it’s
pretty essential for everyone these days. And the product prices are so low in
some cases, that the smallest businesses can be helped by using the software.
As they grow, larger the impetus to do it is even stronger.”
The following pages will detail what types of financial software products exist
today,  what  you  need  to  know  about  your  business  before  considering
accounting software,  and ultimately how to decide what business accounting
software is best for your business.
Business Accounting Software Options- Types of accounting products
available
The range of  accounting software products available for  small  and mid-sized
businesses  has  been  growing  steadily.  Right  now,  there  are  a  few  general
categories  to  choose  from:  small  business payroll  and  accounting packages,
more  full-service  business  management  programs,  online  Web-hosted
applications, and free programs. Here is a run-down of each category and some
of the popular products available for small to mid-sized firms:
Small business payroll and accounting.
There are several top-selling accounting software programs you can buy off the
shelf, or over the Web, that will meet most small business needs by providing
the accounting tools and reports you need to use your financial data. Available
in a variety of tiered editions and for which there are add-ons, such as a cash-
flow calculator. Other popular products include the easy-to-learn drag-and-drop
formatted Simply Accounting by Sage Software, which is available in up to 20-
seat licenses.
Business management software programs.
These are higher-priced and more full-features accounting programs that may
also include other financial functions you need to track in your business, such as
point  of  sale,  inventory  control,  customer  relationship  management  (CRM),
billing,  purchasing,  and  even  enterprise  resource  management  (ERP).  Some
popular picks in this, which integrates all business processes into one solution —
the  latter  of  which  boasts  that  it’s  “everything  you  need  in  one  powerful
solution.”
Web-hosted accounting applications.
A new breed of online financial management applications has emerged in the
last few years, taking advantage of the growing confidence that businesses are
developing in the Web as a safe business environment. Now that entrepreneurs
are indeed becoming comfortable with the ‘software in the cloud model and the
inherent benefits it offers, they are in growing numbers starting to look beyond
e-mail or office productivity to more sophisticated and sensitive applications like
financials.
How  to  Choose  Business  Accounting  Software:  Understand  Your
Accounting Needs
The  first  step  you  need  to  take  in  choosing  accounting  software  for  your
business  is  to  undertake  a  good  needs  analysis,  which  will  address  both
managerial  and  financial  needs.  It  should  be  broad,  exploring  both  obvious
questions  and  ones  that  really  make  you  think.  Take  your  time  with  this
important step, since the last thing you want is to have to repeat this process
within the next two years. If you experience unexpected growth that forces an
upgrade, terrific, but good planning at this stage can help you avoid having to
change software too soon. Get some help before you buy anything.
What you need to know about your business
The first step you need to take before deciding on accounting software is to
make sure  that  you  are  somewhat  financially  literate.  “One of  the  mistakes
businesses make when they buy accounting software is in believing that they
don’t  need  to  know  anything  at  all  about  financial  accounting  because  the
software will just take care of it for you,” says Linda Pinson, author of Keeping
the  Books:  Basic  Recordkeeping  and  Accounting  for  the  Successful  Small
Business (Kaplan  Business  2007).  “They  need  to  understand  small  business
accounting.”
There are several ways that an entrepreneur or small business executive can
become proficient in understanding what data their business needs to keep (in
order  to  make  better  business  decisions)  and  what  reports  they  need  to
generate (for the Internal Revenue Service and state tax authorities). You can
read books. You can take classes. You can do research on the Internet. “You
can’t  use  any  accounting  software  if  it’s  like  garbage  in  and  garbage  out,”
Pinson  says.  That’s  what  the result  is  “if  you don’t  understand  what  you’re
putting in.”
Another  consideration  is  the  type of  business  you  operate.  Several  different
sectors  have specialized modules or  add-on packages because they need to
keep specialized data. If you are a manufacturer,  for instance, then you may
need to have an understanding of inventory and handling of parts and labor. If
you  are  a  retailer,  you  may  also  need  to  have  an  understanding  of  your
inventory through a point-of-sale program. A doctor’s office needs specialized
programs  for  billing  insurance  companies,  although  many  may  farm  this
function out to middlemen and/or consultants.
Talk to your accountant and staff
If  your business has an accountant  — either an outside consultant  or  an in-
house accountant — you would be wise to consult that expert before you take
the  plunge  into  accounting  software.  Your  accountant  may  be  able  to
recommend software that works with programs they have. In fact, Pinson says,
some accountants  may help  you set  up your  accounting  software so that  it
gathers the data that they need to help you file your taxes, as well. “They know
what kind of business you have and what you need,” Pinson says.
Your IT department is just as important as your accountant. You also need to
understand  your  hardware  situation.  Business accounting  software packages
use big databases, usually consisting of many different data tables all working
together, so take a good look at your disk space. As your accounting data grows,
which happens quickly, the more room it will need. This is the most important
item to review, but not the only one. You will need to evaluate the age of your
system, as well as your backup procedures and storage media.
Source: inc.com
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