Bookkeeping is no one’s favourite part of running a business. But this unavoidable aspect isn’t as stressful or confusing as it used to be, thanks to accounting software.
Accounting software helps make bookkeeping easy. It keeps your records, automates manual calculations, and can save you money on your accounting bills. What’s more, accounting software is shifting from becoming a nice-to-have to a must-have for certain businesses under Making Tax Digital (MTD). In fact, most SMEs increased their cash flow after overcoming the learning curve (Osinowo, 2018).
But how do you know which software is right for your business? In this guide, we’ll go through everything you need to know for choosing accounting software for your small business.
List your business needs first
Every business is different. So, it makes sense that not every accounting software will work for you. Rather than starting with the software outwardly, this decision must begin internally with your business.
So what are your bookkeeping and accounting requirements? If you’ve never used accounting software before, this can feel like a hard ask. But it’s about delving into the specifics of your business, like:
Your business structure
Are you a sole trader or a limited company? If you’re a limited company, you will have more accounting requirements to think about for your year-end returns and payroll, rather than just submitting a self-assessment each year.
Your business size
Is it just you, or do you have a team on payroll that you need to consider, too?
VAT
Are you VAT-registered and need a solution that will submit VAT returns each year?
Inventory needs
Do you sell physical products and need a system that also tracks inventory and purchase ordering?
Invoicing
Do you need a system that creates invoices for your business, and do you also require a system that tracks time if you offer time-based services for clients?
Users and access
How many people (e.g., your bookkeeper, business partners) will need to access the software? Most SMEs and self-employed professionals preferred cloud-based software for on-the-go access (Grand View Research, n.d.).
Global reach
Do you sell overseas and need to handle non-sterling transactions?
And finally, what is working and what’s not working with your current system? (Don’t worry if that system is still just an Excel spreadsheet and receipts are kept in a folder!). Identifying any pain points and issues you currently experience will help you choose the right accounting software for your small business.
This could be anything from being too manual and taking too much time, to not integrating with your bank account to view your finances at any given time.
Once you’ve taken a deep dive internally, you end up with a list of must-have features to be on the lookout for when evaluating accounting software.
Decide on your budget
Now that you know what you want, it’s time for the next stage: determining your budget.
Some basic accounting software packages are available for free to small businesses, such as ANNA’s PAYG platform or Zoho Books. And although you can’t beat free for a price, you might want to consider paying a little more each month (or year!) for better features, which can save you money in the long run.
A good way to determine your budget is to consider how much it would cost to hire an accountant to complete your accounts, or how many hours you currently spend on them. How much is getting that time back worth?
It’s also worth looking past the headline monthly fee when it comes to accounting software. Although some options may seem cheaper than others, there could be extra costs associated with feature add-ons, adding extra users (or per-person charges for payroll), or even a surcharge for customer support. Make sure to look carefully at the details.
Choosing accounting software: top 5 tips.
Once you know what you’re after, it’s time to start comparing and getting into the details of accounting software.
1. Start with the features
To begin, start with the must-have features that you identified by examining your business. For example, if you run an e-commerce business, this might be an inventory management system or an integrated payroll solution if you have employees.
Once you’ve established if it has your must-haves, look at how the features will make your life easier. This typically refers to the level of automation included in the software and the number of manual tasks it can take off your hands.
For this, look at features such as automatic syncing to your business bank accounts, receipt captures, invoicing, and supplier payments.
Based on a 2019 study, most logistics and warehouse-based businesses preferred Aware, while Tally was avoided due to its inflexibility. In our case, Sage was the most recommended option for SMEs with a large inventory list (Paul & Sadath, 2019).
Finally, your accounting software needs to integrate seamlessly with any systems that you currently use. Check if it connects to your e-commerce platforms (like Shopify), bank accounts, or payment processors (like Square or PayPal).
Generally speaking, the more automated your accounting system is and the more platforms it’s connected to, the less likely you are to have mistakes from manually entering financial information.
2. Look at the support levels
Unless you’re a qualified accountant, you’re not going to have all the answers. There may come a time when you need help with your accounts, or possibly need a helping hand finding your way around the platform or a feature.
That’s why it’s important to look at the level of customer support that’s offered with each accounting software tool.
Many providers offer great support during the initial setup. But once you’re in, you might be stuck with an automated chatbox for support or spend forever on a busy phone line waiting to get through to someone. Always make sure to check how responsive their customer support team is and how you can contact them if the need arises.
3. Find out how easy it is to use
Not every accounting software is built with beginners in mind. Some have great features, but they are locked behind a steep learning curve, requiring you to master the tool itself.
The ease and intuitiveness of the software will have a significant impact on its usefulness for your business. If you have the time and energy to navigate a steep learning curve, then it’s worth exploring more in-depth software if the features are worth it.
If the features aren’t worth it, then you want to make sure that your accounting software is as easy to use as possible. After all, time is money, and the less you spend on your accounts, the more time you can invest in your business.
Psst: Most accounting software offers free trials or demos. This is a great way to see firsthand how easy the software is to use.
Top-Rated Accounting Software:
| Accounting Software | Cheapest Package | Ease Of Use | Our Rating | Review | Official Site |
|---|---|---|---|---|---|
 | £33/mo | Excellent | 9.4 | Read Review | Visit Website |
 | FREE | Outstanding | 9.3 | Read Review | Visit Website |
 | £10/mo | Excellent | 9.3 | Read Review | Visit Website |
4. Make sure it’s compliant & secure
Security is a big one. This software will keep a record of all your financial data, so you need to ensure that it keeps your information secure and safe. Look for security features such as built-in encryption and Two-Factor Authentication (2FA) to help keep your data private.
As well as being secure, you also need to verify that the accounting software is compliant. It’s worth checking if your software is MTD ready and HMRC-recognised.
5. Will it grow with your business?
The needs of your business might not stay the same forever. If you’re planning to grow and expand in the future, then it’s also important to consider your future needs and whether the accounting software will grow and scale with your business.
It’s kinda pointless getting software that’s perfect for now, if you know you’ll have to start all over again in the near future on another platform.
So, keep an eye out for how software can scale with your business, looking at tiered pricing points – where you might be able to easily change from a “Sole Trader” plan to a “Growing Team” plan, adding users, payroll features, or multi-currency support without having to start over.
In addition to assessing whether your software can scale physically with you, you should also examine how it can drive business growth.
The best systems offer real-time financial visibility through intuitive dashboards and robust reporting tools, providing accurate insights into your finances at any given moment.
Armed with the right information, you can make clearer, more informed decisions about your business.
Choosing accounting software: Get started with our reviews
Knowing what to look for is only half the battle of choosing accounting software for small businesses. Now, it’s time to get into the nitty-gritty details and find out which platform is right for you.
And to help you out, we’ve put in the hours and reviewed all the leading accounting software platforms for you.
But why should you listen to us? The answer is simple: We’ve been exactly where you are.
Business4Beginners was founded in 2013 by Paul, a serial entrepreneur who started his first company in 2009. That means he, and the rest of our team, have spent over a decade running various UK businesses and, crucially, using the accounting software you’re now considering. All of our reviews reflect this experience, finding out the essential information that you need.
We also use a 4-part score system, letting you get to the important information in seconds. This covers:
- Ease of Use
- Value for money
- Customer Support
- Features
Which, if you’ve been paying attention, are the core elements that you should be on the lookout for when choosing accounting software.
Ready to get started? Take a look at our accounting software reviews here.
