This week, we have guest blogger, Patrick Sullivan, CPA, Vice President of Finance and Administration at Brilliant™, taking over for ‘A Brilliant™ Blog — Check In With Jim’ to give insight into selecting accounting software for your small business.
The number of companies offering accounting software has grown significantly over the last few years. The 800-pound gorilla in the market continues to be Intuit’s QuickBooks, which is estimated to have about 750,000 online users and about 5.2 million desktop users. There are many up-and-comers who continue to infiltrate the marketplace. An example of one of these is Xero, which is estimated to have approximately 450,000 users – the majority of these are in Europe and the U.K. (Note: The vast majority of QuickBooks users are U.S.-based).
Functionality has improved considerably with this influx of new competitors, and many have focused on providing a cloud-based environment so that the user doesn’t need to worry about installation of software, upgrades, etc. Examples of this include FreshBooks, Wave Accounting, Kashoo, LessAccounting, FinancialForce, and Zoho Books. Some old standbys such as QuickBooks, Intacct and Peachtree (now operating as Sage) have also upgraded their product. In addition, many offer cloud versions (SAS) to compete with the likes of Net Suite and others. Many offer versions that will work with mobile devices, as well.
I believe the following topics should be considered when determining which software is best for your small business.
- 1. Size of Your Company
- You should think of this in terms of volume of transactions. If you’re a start-up business with low transaction volume that is trying to manage costs, some of the new cloud-based software is offered for free or at very low cost. Keep in mind that some of these will be very stripped-down versions and some will even have transaction limits (such as only 5 invoices per month, for example). The higher the number of transactions you have, the more you’ll likely need a “full service” software such as QuickBooks – which has some modules that are add-ons to manage the cost.
- 2. Desktop vs. Network vs. Online
- If you are a new business where only one person needs to work within the accounting software, then the desktop version may be best for you (and the cheapest option). If you have multiple users, then you probably want to consider a network version where multiple users can access the database in a network environment, or the online version where multiple users can access the database from any location with an Internet connection.
- You’ll also need to determine the sophistication of your IT staff (if you actually have an IT staff). In a desktop environment, you generally don’t need an IT person involved. For a provider such as QuickBooks, they have many levels of support that you can access. Some of the smaller start-ups (such as Xero for example) offer only email support. In a network environment you likely need to have IT personnel (internal or external) to support your network. Lastly, if you use the cloud-based version of the software, then you likely need very little support, and the system will generally be upgraded continually as new fixes and options are developed.
- 3. Complexity of Your Business
- You’ll need to consider what you need the accounting software to do. Do you have inventory? Will you process payroll, or leave it to an expert third-party provider? Do you need to have links to other systems (a CRM for example)? These are all options that you need to take into account.
- Further, the majority of these systems will have some ability to download data into Excel. This will allow you to manipulate the data to create various reports and analysis that you need. The necessity to upload data into your accounting system may limit your options, as well.
- 4. Cost of the Solution
- The last major item to consider is cost. If you buy a desktop version of QuickBooks Pro, you will likely pay around $200. And if you opt for the online version of QuickBooks, your cost will be as low as $12.95 per month. Keep in mind, that you may need to include additional modules for things like payroll or inventory, which depending on the vendor, could have additional cost.
- You can find a solution for just about any price point. To put things into perspective, as you grow and potentially move to a mid-tier product such as Microsoft Dynamics, you can pay as much as $50,000 – $100,000 for the product depending on what modules you’ll need, and how much support you’ll need (you will likely need to hire a consulting or accounting firm to help you install the product, get training, populate historical data, answer questions, etc.). So you should try and stick with the entry-level software as long as you can. This is not necessarily a bad thing since the options continue to grow, and more and more features continue to be added.
Summary
Accounting Software options have increased considerably in the last couple of years, as many new providers have entered the market. When determining what software is best for your small business, you will need to consider the size of your company (as measured by number of transactions), what type of software you prefer in regards to desktop, network, or online, the complexity of your business, and what you are willing to pay. There is a solution out there for every company – you just need to find the right one.
What are other things small businesses should consider when selecting accounting software? Comment below and let us know! For questions on this blog, or to contact a Brilliant™ team member, call 312.582.1800 or email info@brilliantfs.com and reference this blog.