The 5 Best Accounting Software
Special Honors
Microsoft Dynamics 365 This online suite from one of the forefathers of computing offers a litany of useful tools, all of which save automatically to the cloud whenever it syncs with your attached accounts or receives input from your PC or mobile device. It's available as a subscription with a trio of pricing tiers to best meet your business' needs. microsoft.com
Xero Beautiful Business If you understand thing better with visual aids, this might be the program for you. It can produce a whole host of useful charts and graphs that make sense of everything from your cash flow to your customer demographics. Its integrated advisor tools can help you make sense of all that data, as well, and build a strategy for growing your brand. xero.com
Editor's Notes
May 04, 2020:
For the most part, this iteration of our ranking is made up of upgraded versions of the software included on our previous list. The one big exception to this comes from Quicken Home and Business, which has reconfigured its software to perform on a yearly subscription basis, as opposed to an outright purchase. In the process, the software has become significantly buggy, with problems loading spreadsheets and issues with bank integration.
The best options for most businesses still come from Intuit, and QuickBooks Desktop Premier 2020 is undoubtedly their most complete package. Intuit QuickBooks Desktop Pro has a few more tools come tax time, but Premier has the ability to get deep into customizations like setting product and service prices by customer type, making it easier for certain providers to develop sliding scales where necessary. The one potential downside to Intuit's model is that they've always been better on PCs, and they brought an Apple-friendly version of their products to the game as something of an afterthought. Intuit QuickBooks Mac Version has a few bugs of its own as a result. They aren't the kind of thing that could create mayhem or financial turmoil, but they're frustrating.
And even though Quicken has fumbled their online development a bit, there are a handful of other companies that have put together high-quality cloud-based accounting programs that you'll find in our special honors section.
The Benefits Of Using Business Accounting Software
This means that you won't have to enter sales information into a separate spreadsheet after creating the invoice.
Accounting software offers your business a number of advantages over traditional accounting methods. Two of the biggest benefits most business owners immediately notice are increases in efficiency and accuracy. Unlike with manual bookkeeping, accounting software can sync a variety of financial transactions, eliminating the need for double data entry. For example, many accounting software incorporate customer invoicing. This means that you won't have to enter sales information into a separate spreadsheet after creating the invoice. Instead, the software will automatically enter the data in your accounting spreadsheet after the invoice is created. It isn't just invoicing where you can save time, either. Many accounting software also allow you to integrate payroll, bank deposits, and other financial processes into the system.
Having accounting software that automatically updates your financial records when transactions happen means that you can access financial data at any time, unlike with traditional bookkeeping, in which reconciling transactions is often only done quarterly. With the click of just a couple of buttons, you can view your accounts payable and accounts receivable totals. Knowing exactly where your company's finances stand at any given moment enables you to better manage your cash flow. You can also spot any potential issues before they become full-blown problems.
Automating the recording and formulating of all of your financial transaction data greatly reduces the possibility of human error, as well. The fewer times a human must manually enter financial data, the fewer chances of making a mistake. If you or your employees must make a spreadsheet entry twice for a single transaction, the chances of making a mistake potentially double. The same can be said for the amount of manual calculating you or your employees must perform. When performing manual calculations, there is always the possibility of inputting the wrong number or miscalculating a total. Letting accounting software handle all of the calculations completely eliminates the possibility of human error.
How Accounting Software Makes Tax Compliance Easier
Tax time is a stressful period for most business owners. Correctly determining your tax liabilities can seem overly complicated and intimidating, especially if you haven't been keeping accurate and detailed records throughout the year. Luckily, accounting software can help simplify this process for you. Having all of your financial information at your fingertips ensures that you will know exactly how much profit your business has made for the year. You will be able to generate reports that show how much you have paid out to employees and independent contractors, how much sales tax you have collected, which invoices have yet to be paid, and more. All of this information is needed during tax time, no matter whether you choose to use a professional accountant or some form of online tax software for your tax preparation needs.
Having all of your financial information at your fingertips ensures that you will know exactly how much profit your business has made for the year.
Some accounting software come with integrated tax compliance functions to further simplify the process. For example, depending on which software you choose, it may be able to automatically identify and separate tax-deductible expenses, calculate interest paid on loans, or calculate your tax liabilities. Others may have add-on packages to perform tax-related tasks. These can be helpful if you want to start off with a basic software, and add more features as you get more comfortable using it.
Even if your accounting software doesn't come with built-in tax compliance features and doesn't have any add-on packages, you may be able to integrate your payroll solution, which should already handle many of the employee-related tax compliance aspects for you. Combining a high-quality payroll solution, accounting software, and an efficient online tax filing software is the holy trinity of business record keeping. It will eliminate the need for you to spend tons of money employing a full-time bookkeeper or having to hire a professional accountant come tax time.
Getting audited is whole different can of worms that can make even the staunchest business owner's heart skip a beat. Just the thought of the IRS combing through the last five years of your financial records is terrifying for most. Of course, those who make use of accounting software rest easy knowing they can immediately produce any data the IRS requests.
How To Choose The Right Business Accounting Software
When it comes time to choose accounting software for yourself or your business, there are two factors that should weigh most heavily on your decision: ease of use and functionality. More than likely, with a bit of time investment, you can learn to use any accounting software, but you have to ask yourself how much time you really want to dedicate to it. While most accounting software are designed to be easy for the average consumer to get themselves up and running quickly, there are a few that are designed with financial professionals in mind. These may offer more functionality, but that won't matter if you can't, or don't want to, figure out how to use it.
More than likely, with a bit of time investment, you can learn to use any accounting software, but you have to ask yourself how much time you really want to dedicate to it.
Once you have narrowed the field down to software that offers the ease of use you are looking for, it is time to compare the features they offer with the features you need. Basic functionality that you can expect from all accounting software includes income and expense tracking and report generation. As software gets more complex, it may provide invoicing, customer management, inventory tracking, employee hours tracking, credit card processing, bank account integration, tax document preparation, and more. It is always best to choose software that can grow with your business. Even if you don't have need of certain functionality now, you may in the future. Choose one that offers all of the functionality you currently need and the functionality you might need in the foreseeable future.
Software that allows for multi-user access is usually a smart choice, as well. This lets you invite other users to view the financial data, such as an employee, business partner, or accountant. If you do decide to choose software with multi-user access, look for one that lets you control the permitted tasks of each user and what data they can view. For instance, you may want to provide a business partner with full access, but only provide an employee with access to the invoicing feature.