by Kelly Wingard, Author, VendorGuru
While an off-the-shelf mainstream accounting program may work for a sole proprietorship or small home-based business, larger firms may be better off with semi-custom or proprietary enterprise management (ERP) solutions designed to integrate with existing supply chain, human resources management, customer relationship management, and other systems to get a more seamless upgrade. Or perhaps a dedicated accounting / financial management package is all you need
to run your medium-sized business.
Assessing Your Software Needs
Although requirements can vary by industry, accounting software packages universally provide a means to track income and expenses and to generate reports. Before you start looking at software, consider what you want from your accounting system. Products vary in their capabilities, from simple checkbooks and cash-accounting systems to those that handle complex financial management, tax accounting, payroll, investments, job costing and inventory management. Many systems offer the option to purchase the modules that you need now and buy additional ones later when needed. This may make changing as your business grows easier on employees already familiar with your existing system.
Accounting software packages can provide the following business tools:
- Management utilities
- Generate balance sheets and profit and loss statements
- Track accounts receivable/payable
- Support job costing
- Quarterly federal and state tax payment estimation
- Income tax preparation
- Sales tax preparation
- Payroll computation
- Calculate payroll checks
- Compute payroll deposits
- Prepare quarterly and year-end reports
- Inventory management
- Identify stock on-hand
- Generate purchase orders
- Compute cost-of-goods-sold
Some of the above features are standard on all small- to mid-sized accounting software programs. Others are part of extensive ERP systems. Systems created especially for your industry, if you're in construction or manufacturing for example, may provide the best solution.
Other Selection Concerns
In addition to the basics, you also may want to consider other added-value features, such as customizable reports and the ability to print checks, prepare electronic invoices, and generate purchase orders. A service-oriented business may require a billing component based on time. Internet connectivity is an increasingly important feature as business moves inevitably toward a paperless environment. The ability to connect your accounting software to the Internet allows you to download financial statements and transfer and receive payments. You may even choose a Web-based or hosted solution, which can offer faster implementation, easier upgrading, and cost less, depending on your business.
Ease of Use an Important Consideration
Consider also who will be the primary users of your accounting software--an in-house accounting staff or CPA will make better use of more extensive capabilities than a bookkeeper who just sends the data off to an outside accountant each month. And when you give your software a trial run test the technical support staff as well as the sales team. The ideal accounting software solution should be like the ideal business partner--it does what needs to be done efficiently so that you can direct your energy and skill toward growing your business.
Accounting Software 411
CNET Reviews: Crunch your numbers: business accounting software
PC Magazine: How to Choose an Accounting Package
PC World: Mailbag: Selecting a Small-Business Accounting App
Tech Target (2020Software.com)
Kelly Wingard is a freelance writer and a 25-year veteran tax preparer. She contributes regularly to the University of Illinois Tax School training manual for tax professionals.