Business accounting involves far more than merely tracking the inflow and outflow of money. It's an integrated financial system that tracks every component of your daily operations that impacts revenue and cash flow. There are dozens of small business software solutions that can help you manage your accounting and bookkeeping tasks. You'll be able to track your accounts receivable and accounts payable, thereby balancing your daily cash flow needs. Accounting software also allows you to create invoices for your customers and payments for your vendors. Below, you'll learn 4 tips for choosing the right small business accounting solution for your company.
Tip #1: An Eye For Expansion
Your business will grow over time. Not only will your revenue grow based upon your current line of products or services, but the scope of your company will likely grow, as well. For example, you may add new products which will require updated inventory tracking. Or, you might eventually bring payroll and project bid tracking functions in-house, requiring an upgrade to your accounting system. Your financial software should be capable of expanding with your business.
Tip #2: Is It Compatible?
Millions of small business owners are already using some form of accounting software. Unfortunately, much of this software is limited in functionality. What's worse, their inherent limitations can prevent migrating to newer, more robust accounting solutions. If you're buying your first accounting software package, make sure it will be compatible with other solutions. Most large financial software companies (i.e. Intuit, Peachtree, etc.) develop solutions that are compatible with other applications.
Tip #3: Look Beyond Price
Many small companies plan to grow their revenues past the $1 million mark. Oddly, they'll spend as little as possible for business accounting software. While some solutions can cost under $100, keep in mind that their functionality will be limited. Plus, many inexpensive accounting packages won't be able to grow with your business. Don't make the mistake of using the price as the sole factor in deciding which solution to purchase. Being overly-frugal may actually sabotage your company's future growth.
Tip #4: Integration With Your Bank
Your company's finances will be closely tied to your merchant account at your bank. Payments, lines of credit, business loans and other relationships with your bank can be essential to your success. Before investing in an accounting software package, check with your bank to make sure they support the software. That will allow you to download transactional data seamlessly from your business bank account into your financial software.
Making The Right Choice
Financial accounting and bookkeeping are critical functions for any small business. Even if you have a limited number of products and few employees, an accounting software package can save hours of effort and help you plan for future growth. As your company grows, your software must be able to grow with it. When you're ready to invest in a solution, look for expandability and compatibility. Also, try to buy software that you can integrate with your business bank account. Finally, consider the cost of the software as one of many factors in making the right decision.