Last Updated on October 11, 2021 by Editorial Team
Accounting tools are an important element of running your small business. It might not be as fun as making sales, but accounting helps keep you in business, ensuring that you don’t spend too much money without realizing it. If you’re running a small business, you need accounting software. What are the most common accounting software tools for businesses?
What to Look for in an Accounting Software
Before you can look at the most well-known accounting software tools, you first need to know what you should look for in your accounting software. These are some elements that should likely be a part of your accounting software, depending on what type of business you’re running.
- Balance Sheets
A balance sheet effectively keeps track of your assets and liabilities. With a balance sheet, you can keep track of what’s going on with your short-term and long-term liabilities, letting you know how best to use your various sources of income. It’s also crucial when you’re dealing with banks and trying to sell your business.
- Cash Flow Management
Cash flow management allows you to understand your current cash reserves and figure out when you can afford to spend more. Especially as you ramp up your business, you’re going to want to track cash flow so you can know more about when it’s safe to invest in new opportunities versus when you want to cut back on cash expenditures.
- Invoice Creation and Management
You have to get paid, and invoices are a way to do that. Many accounting tools allow you to send your invoices directly, providing a paper trail for both you and your clients. You want to look for accounting software that allows you to keep track of all of your invoices, and many of the best software options allow you to accept credit cards directly.
- Expense Management
It’s important not to just look at revenue, but instead to look at profit overall. That means understanding your expenses, including fixed costs like rent, variable costs like hourly employees, and occasional expenses. Expense management allows you to understand your revenue and expenses as a complete picture that leads to your profit.
- Free Trials
Before you decide on the accounting software that you’re actually going to use, you want some time to take each software out for a spin. That allows you to see where it’s meeting your needs and where, if at all, it isn’t holding up. Free trials are a great way to do that. If there isn’t any advertising for a free trial, you can always email the company to request one personally.
- Inventory Management
If you sell goods, whether it’s in a retail store or online, you’ll need to manage your inventory. Managing your inventory allows you to keep track of when you need to restock, understand what types of products are most popular, and understand your cost and profits both before and after you’ve sold out of your business’s stock.
- Payroll and Sales Tax Management
The biggest reason to look for accounting software that helps with payroll and sales tax is if your business spans multiple states or even multiple countries. Different jurisdictions have different rules for payroll and sales tax, and that can make taxes much more complex. Using accounting software can help. Talk to your accountant to make sure the tool you’re using measures up to their tax requirements.
- Time Tracking
Any company that offers services will probably need to use accounting software with time tracking. That includes anything where you’ll end up needing to invoice clients for a specific amount of time. Make sure the accounting tool allows multiple individuals to complete time-tracking activities by every name, or see whether you can connect the accounting software to another time tracking software.
The Most Common Accounting Software Tools
So, with all of these things in mind, what are some of the most common accounting software features? When you’re looking at accounting software, you need to think about how many people are using them, what kinds of people are using them, and what their overall rating is. After all, accounting software that’s amazing for very small businesses might not be great with medium-sized businesses. Here are four of the most common accounting software tools out there:
- QuickBooks Online: 16,000+ Capterra Reviews, 4.5 Stars out of 5
- FreshBooks: 3,200+ Capterra Reviews, 4.5 Stars out of 5
- Zoho Books: 400+ Capterra Reviews, 4.4 Stars out of 5
- Sage 50cloud: 200+ Capterra Reviews, 3.7 Stars out of 5
As you can see, different accounting software tools may have different uses and be better or worse at managing your accounting needs than others. However, it’s important that you make sure you look at the actual elements of the accounting software. Just because accounting software has the highest ratings doesn’t mean it’ll work for your business. Learn more about your accounting software before you sign up for the best results.
Making sure you have the best accounting software is one of the most important things you can do as a small business owner. If you want the best results for your business, it’s important that you have great accounting software. Use these tips and tricks to ensure that you end up with the best accounting software for your needs, no matter what type of accounting software you end up using.