Accounting software is beneficial to owners of small businesses because it assists them in monitoring their accounts receivable and accounts payable, provides them with a transparent view of their profitability, and helps them get ready for tax season.
In the realm of accounting software, a small business is one that is able to make use of “out-of-the-box” software without the need for major adaptations. It is common for a growing company to require a bespoke enterprise resource planning (ERP) system to accommodate its more intricate accounting demands as the company expands.
Small businesses have access to a diverse selection of accounting software options, each of which comes with a unique set of features and a unique pricing point.
A small business owner may begin the process of selecting the accounting software that is ideal for their company by considering two factors: the sort of business they run and the number of workers they have. For instance, a restaurant owner’s requirements for their accounting software are going to be somewhat different from those of a freelancer.
What is Accounting Software?
Accounting software is a type of computer program that keeps track of and reports on the financial activities of a company. The modules of accounts payable and receivable, billing, and bookkeeping are considered to be the core components of accounting software.
The following are examples of non-core modules that may be included in accounting software: debt collection, expenditures, timesheets, purchase reconciliation, payroll, and reporting for each of these.
There are two primary deployment models for accounting software: the cloud and the desktop. The cloud-based accounting software presented here is considered to be the most effective accounting software for small firms.
How Does Accounting Software Work?
After the bank accounts and credit cards of a company have been synchronized with the accounting software, transactions will begin to appear in a queue and will be able to be categorized according to the headings that are located on the company’s chart of accounts. Once the appropriate category has been selected, the transactions will start to generate the company’s financial statements.
A financial report may be generated in a matter of seconds for owners of businesses to analyze profitability, compare income and costs, verify bank and loan balances, and forecast tax liabilities. The ability to quickly access this financial information equips owners of businesses with the authority necessary to make crucial decisions.
In addition, most accounting software enables the integration of applications developed by other parties. For instance, if a business owner records sales transactions using a point of sale (POS) system, then the POS system could potentially integrate with the accounting software to record specific transactions, sales tax liabilities, sales by subcategories, and more.
This would be possible if the POS system was designed to do so. In a company that provides services, a time tracking tool may be able to link with the company’s accounting software in order to add labor to an invoice for a customer.
Best Accounting Software
QuickBooks
You won’t have to start from scratch when creating financial reports if you use QuickBooks since the program comes with built-in reports. These built-in reports include the trial balance, general ledger, and 1099 transaction detail reports that you’ll need when it comes time to file your taxes.
You may make the reports that you utilize the most favorites, which will allow you to locate them more quickly at the top of the Reports page. You may also configure the software to automatically run reports and send them to you through email.
These operations can be programmed to take place at a certain time of day and on a recurring basis, such as daily, weekly, monthly, or quarterly. We looked at a lot of different accounting software, and QuickBooks has some of the greatest reporting tools available.
Get Paid Upfront is a feature that may be utilized by QuickBooks customers that enables small businesses to avoid the wait time associated with delinquent bills and have immediate access to their funds. Through the use of this invoicing program, small companies have the opportunity to submit an application for an advance of cash based on one or more of their eligible invoices.
When the owner of a small business delivers an invoice, they will have the option of getting an advance on the cash, which will allow them to access the money sooner. After it is authorized, an immediate payment of 97% of the invoice total will be put into their bank account for a fee of 3% up front. The advance can go up to $30,000, and there is no interest charged on it for the first month that it is received.
NetSuite
NetSuite is an enterprise resource planning (ERP) and accounting software solution that caters to companies that have more intricate requirements. You are able to send and receive payments, run a variety of reports, and handle your taxes with this software.
Automation has been welcomed by NetSuite, which makes it simple to send invoices and collect payments. Furthermore, the company offers powerful tax management solutions that are compatible with all currencies and exchange rates. The software will automatically handle sales and payments in accordance with the local regulations of the countries in which you are conducting business if you have foreign customers.
In addition, there is a solution available for revenue recognition management, which assists business owners in meeting accounting rules and timely reporting of financial results.
The management of cash flow may also be simplified owing to a broad collection of tools that give insight into your cash. This makes it much simpler to maximize cash, maintain control over bank accounts, and comply with laws and regulations.
The planning and budgeting capabilities of NetSuite unify data in order to assist you in planning, while the payment administration system of NetSuite centralizes payments. It is also simple to generate budgets and projections for your organization, prepare for “what-if” situations, and run reports on a wide variety of facets of your operation. To keep you in control, NetSuite lets you set permissions.
The ERP capability of NetSuite not only enables you to plan for the future but also provides a number of useful ERP tools that can be used to manage your finances, inventory, manufacturing, and supply chain.
It is impossible to receive an accurate price for NetSuite without first contacting a NetSuite sales person. This is due to the fact that NetSuite comes with a large number of features and tools. There is a form that can be filled out on the website in order to schedule a free demonstration.
FreshBooks
This accounting software may link to your bank, provide a number of reports, keep track of the time you spend on tasks, and assist you in managing those projects. If you use FreshBooks, you have the added benefit of being able to provide customers with the option to pay bills via invoices, which speeds up the process of being paid.
If you have customers who are often late in paying their bills, FreshBooks gives you the ability to nudge them in the right direction by sending them reminders and notifications when their payments are due or overdue. With this accounting software, you will be able to keep track of when clients receive and open their bills.
FreshBooks is one of our top recommendations since, in addition to providing invoices, it excels in a wide variety of other areas as well. You may keep track of the amount of time spent on tasks, for instance, as well as take photographs of receipts and log them while you are on the move. In addition, the double-entry accounting capabilities ensure that you won’t make any errors that might cause your ledger to become inaccurate.
You may have peace of mind knowing that your debits and credits will be brought into equilibrium thanks to the presence of automatic checks and balances. This program can also link with over 80 different major business apps, providing you with a more comprehensive picture of your company as a whole.
Zoho Books
When you utilize simple accounting software, the last thing you want is for it to have an outmoded user interface or functions that are so fundamental that you can’t learn anything useful about your company from the data it stores. This is what separates Zoho Books from its competitors: The interface of the platform is contemporary and slick, despite the fact that it is simple to use and does not lack capabilities.
It is also capable of automating many corporate operations, which may speed up many of those procedures and save a lot of time.
You are able to set up recurring invoices and send automatic payment reminders. Additionally, you are able to take payments inside invoices if you integrate your payment processor with Zoho Books. You can also automate the generation of reports; Zoho Books enables you to plan when you want reports to be generated and then sends you copies of those reports through email.
Another characteristic that distinguishes Zoho Books from its competitors is the company’s client portal. This is a website that your clients can go to in order to view invoices, make comments, and pay online. This is a very useful tool for companies who collaborate closely with their customers on the projects they are working on. You may configure the portal to permit your clients to provide feedback on your services if you are interested in hearing what they have to say.
Conclusion
The accounting software that is discussed in this article may be learned and used by business owners, founders, and entrepreneurs without the need to hire a specialized accounting professional to handle the company’s finances effectively.
