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Finance 101: Navigating small business accounting software
This is the third post in a series on the basics of small business finances. Check out our posts on small business bank accounts and small business credit cards, and stay tuned for future posts in this series.
Our earlier posts in this series covered small business bank accounts and credit cards, underscoring how important it is to keep your personal and business accounts separate. Another important step in formalizing your small business finances is devising a bookkeeping or accounting system that works for your small business. While some people might be able to come up with their own system, using accounting or bookkeeping software can be a great way to simplify your processes.
Recording your expenses using bookkeeping or accounting software might seem like a pain, but using these tools can save you time and money in the long run. Many of these tools have features that help you manage various aspects of your finances all in one place. What’s more, they offer reports that allow you to analyze your business revenue and spending, valuable insights that can help you increase efficiency and operations.
Keep the following things in mind when choosing accounting software for your business:
- Software features—Accounting software offers a wide range of features, including expense tracking, invoicing and payment processing, online payroll, employee expense reimbursements, business and/or personal tax preparation, audit support, monthly reporting and more. Some software is also able to more smoothly integrate with your bank accounts and other third-party apps you might use.
These features are great, but you probably don’t want to pay for features you won’t use. You also want to think about anything you might need specific to your business or industry. For example, do you need to be able to track depreciation for your equipment and inventory? Are you in retail and need your accounting software to integrate with your point-of-sale system? Make sure your software is going to offer the support your business needs.
- Cost—If you can forgo some of the features of the more comprehensive software options, there are great low-cost options out there. Check out NerdWallet’s recommendations for the best low-cost business accounting software, which still come with important features like expense tracking, invoicing and integration with tools like Square. There’s even a free version of QuickBooks, one of the most popular accounting software applications, which might work for you if you have fewer than 20 customers.
- Customer support—Maybe you are a numbers or technology whiz and are confident you can navigate issues on your own. Or maybe finances aren’t your expertise and you want your software to have live support available 24/7 to answer any questions. Make sure you review the customer service options before choosing a bookkeeping tool for your small business.
If you want to learn more about your small business accounting software options, check out NerdWallet’s list of the best small business bookkeeping software. Keep in mind that you may still need to have an accountant on hand to help you with some of the more complicated financial issues, and you’ll want to make sure your system works for them too. And don’t be afraid to take advantage of free trials for these software tools so you can try out different options.
Accounting software has made it significantly easier for a small business owner to track expenses and finances. Incorporating this technology can simplify your business finances and save you important time and money. Whichever option you choose, make sure you have an accounting system in place that lets you focus on the aspects of running your business you care most about.
Stay tuned for the next installment of this series, which will go over some of the basic financial terms you should know before you seek small business financing.