Why a business needs accounting software & how to choose it

Accounting software helps a small business owner to track & monitor all his expenses and transactions in a month. It provides various financial reports to understand & analyze business health.

When a person starts his own business when he became an entrepreneur. Entrepreneurship sometimes a passion, sometimes to help society but in the end, each & every entrepreneur has a goal of making profits.

Making profit is the ultimate aim of every business or entrepreneur but to have accountability of every penny, accounting is inevitable. Accounting can be managed manually as well as by using tools.

When a start-up starts its operation officially, it will need some tools to manage business easily also for business growth. And one of the much-needed tools is accounting software. An accounting software helps a business to understand business health, business growth in terms of profits, product demand in the market, proper inventory management etc.

Choosing the best accounting software that would fulfill your business requirements is not that easy yet very sensitive as it will affect your business in the long run. You must be thinking how it will affect your business? Let’s take an example: Initially, your business had 5-6 employees so you choose software which currently able to meet your requirements and works perfectly but after a year your business grows with 30 employees. Now your software is not able to perform in a better manner as it’s not made for companies which are making a huge profit and has more manpower. After all, you have to buy new software. This way a bad decision can affect your business.

Now, here are some key notes which will help a business owner or entrepreneur to choose the best accounting software.

Accounting software is of two types; online & offline. Online is based on cloud technology. A business owner needs an internet connection to access online accounting software while offline software can be accessed without having internet access, as it’s a desktop software.

What are some key points to reconsider before selecting accounting software?

Software Type: First find out what are your business needs. Try to understand is your business needs an offline or online software. The offline software can be accessed only on the desktop. But online software can be accessed anywhere & on any device. So, first determine the type of software you want for your business.

Software attributes: Now let’s quickly jump to the next segment i.e. software attribute. Software attribute is very vital keynote a business need to look for in software. If a small business has an average rate of revenue. Let’s say Rs. 8 Lakhs per year then it must be looking for only an invoice generation & billing. This type of business would never look for full-fledged accounting software with the high package.

So, identify business needs with respect to accounting and then pick a list of software that incorporates all features.

The best accounting software for all kind of business must possess below mention features;

  • Quick & easy tax enabled invoicing
  • POS mode billing
  • Barcoding
  • Income & expense management
  • E-way bill
  • Bank integration & reconciliation
  • Inventory Management
  • Warehouse management
  • Purchase order & item tracking
  • All GST reports
  • Invoice tracking
  • Auto payment reminder
  • Multi-user facility
  • Multi-currency facility

Offline accounting software can’t have some features from above like direct sending of invoices to customer emails, auto due payment reminders etc.

Accessibility: Accessibility is very much important as it enhances the quality & usability of the software. In start-ups’ & small businesses, accounting majorly maintained by business owners as they have less budget to hire an accountant or accounting professional. So, the accounting software must be very easy to use & understand as the business owner doesn’t usually have less time to expend in accounting works.

In this GST regime return, the filing has to be done on monthly basis. A small or single error in accounting can cause a big trouble for a business. In this aspect cloud accounting software are of a great help as it will do automatic bank reconciliation with a negligible error also can edit entries at any time and they provide 24×7 support assistance.

Data Safety: Data safety should a major concern for all businesses. A cloud accounting software would be able to provide more data safety than offline software. Why?

Let’s take an example: Your system got corrupted and your engineer asked to format it then all your accounting data will be removed from the software as its a desktop software and data is in the software itself not in cloud or server. But in the case of cloud / online accounting software data will save in server or in the cloud so whether your system broke down or software updated still data will be there with you. All your data will be safe & secure. Its the major benefit of using cloud accounting software.

Customer Support: Customer support and after sales service is very important in the customer viewpoint. A customer might face any issue in using a software and the customer support department should be always ready to help their customers quickly. In accounting quick customer support is very much needed. If there is an issue with downloading as an invoice or calculating tax deductions at that time a quick support is of great help & always appreciated.

A better after sales service also helps to increase the positive reviews for a software alongside increase sales rate.

Software Flexibility: From the time of inception, every business or start-ups’ has set their target market and according to that they designed their product. Some software only made for small business and some for all type of businesses. If you started using an accounting software made for only start-ups’ & small businesses then let’s say after 3 years your business grows but your current software is unable to accommodate your requirements then you have one option left i.e. to buy a new one. It will be an add-on cost to your expenses.

So, it would be better for a business to choose a software which is flexible and can function without any issue with huge data. It will be value for money decision.

Unseen costs: Normally businesses charge some extra costs for a software upgrade or for updating. Always have a clear discussion with the company about the actual cost of product & any future costs. This will be helpful for your business to avoid any hidden cost burden.

Business Budget: Lastly, do a proper budgeting to find out how much cost you can afford. Budget is a major concern for small business and start-ups. Apart from accounting software, budgeting or say cash flow management software is a most needed tool for small business & start-up’s to keep track on the movement of every penny also to do an accurate forecast for profitable business growth.

Steps to undertake for finalizing an accounting tool

  • Figure out the needs of your accountant or the features he looks for in an accounting software
  • Then find out your budget to purchase accounting software
  • Make a list of software which fulfills all your required fields and fall in your set budget
  • Analyse all software and finalize two or three of them
  • Go for a free trial to know more about the software
  • Then finalize and purchase the best software that suits your business

Conclusion

In this GST regime, the need for accounting software highly increased to have accountability in business finance. Above mentioned steps are very necessary and should be followed by entrepreneurs & business owners in order to choose the best software for their business.

Why cloud accounting is better than traditional accounting?

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