An important part of running a business is tracking your finances so you can run profit and loss statements, balance sheets, budget to actual reports, and others if needed. A very small business with minimal financial activity may be able to get away with using an Excel spreadsheet for this, but you’ll really want to have a full accounting system. The best accounting system to use will depend on the size and complexity of your business, your reporting needs, and if you’ll need it to integrate with any other systems, such as a CRM, payroll system, or payment processor.
As software companies move towards the cloud, it’s now difficult to find accounting systems that are desktop-based, which allows you to buy the software once and own it forever. You’ll probably end up with a cloud-based software and paying a monthly subscription. That being said, there are a lot of cloud options to choose from in the accounting space. Most of them offer free trials so you can take it for a spin before making a long-term commitment. The cost will vary based on the number of users or licenses you need, and the version of the software you choose; almost everyone has multiple tiers of their system with more or less features available, based on what you need.
For smaller companies, from start-up to a couple million dollars of revenue a year, some popular options are:
- QuickBooks – desktop and online versions are available
- Xero (review)
- Freshbooks (review)
- ZohoBooks (review)
- Sage50 (review)
As you grow, and have more complex accounting and reporting needs, you may need a deeper accounting system. This may involve having multiple locations and/or departments, inventory management, procurement, etc. If you’re larger than a couple million dollars of revenue a year, three big players are:
Choosing the right accounting software is not a cut and dry question, since it depends on your business needs, what information you need to track, and what you want to be able to report on. Take the time to get reviews and demos of softwares you’re considering. Whoever handles your accounting should be involved in the decision-making process, as should your IT person, if you have one, to make sure the new system will meet your needs, integrate with other systems you use, and is implemented/rolled out well. Plan out the transition from your existing software to the new one and make sure data imports correctly, third party integrations are set up and working smoothly, and users are trained well.