The Best Small Business Accounting Software and why you need to use it
If you’re self-employed or run a small business, the problem of accounting is always at the back of your mind. You have a legal duty to produce accounts, do payroll, and provide tax returns, but if you’re like most business owners, these tasks are outside of your expertise. You’re not an accountant, so why is the government treating you as if you are one?
The good news is that technology is starting to come to the rescue. Numerous software companies now offer bookkeeping software which takes away much of the administrative burden of dealing with your accounts. Most software packages simply connect to your bank account and then get on with all of the balance sheet voodoo in the background, freeing you up to do more exciting work.
Go back twenty years or so, and things weren’t so simple. Accounting software was not only dumb but complicated too. You had to tell it precisely what you wanted it to do before it would help you. Moreover, you had to be an expert just to operate it, meaning that it was often easier for many business owners to do their accounts by hand.
Things have improved enormously. Not only are software packages today a lot smarter than they ever were in the past, but they also provide many more features too. The same piece of software that tracks expenses, for instance, can now do payroll, letting you integrate all of your financial activities into a single platform.
So with that said, what is the best accounting software for small businesses on the market today? Let’s take a look
Xero Cloud-Accounting
Accounting software leader, Xero markets itself as the largest accounting software provider in the world, but it is just as at home in startups as it is in big business.
Xero offers smaller companies three significant benefits: flexibility, simple record keeping, and education. Let’s take a look at each of these in turn.
First, flexibility – what makes Xero so good on this front? When you operate a small business, you don’t always need all of the bells and whistles that come along with accounting software. Most of the time, you only need the basics: payroll, expense calculators, and tools that let you construct financial statements and tax returns. One of the advantages of Xero is that it rarely makes you pay for stuff that you don’t need. It offers a kind of modular service: you bolt on additional products, as and when you need them. Xero add-ons, for instance, include things like CRM, online payment gateways, and KPI reporting tools. These are all thing that might be helpful in the future, but you might not need today.
What about record keeping? Xero helps here too. The product really shines in its ability to help small businesses comply with record-keeping obligations. Every company has to satisfy the rules of the tax authorities and government. Going through all of the laws yourself is a massive time-sink. Xero knows this, so it provides customers with a system that makes it easy for them to comply with regulatory requirements. Most of the time, they don’t even know they’re doing it.
Finally, there’s education. The company offers micro-enterprises, small businesses and startups, enrolment on its in-house Xero Business Booster program. The course gives business leaders the chance to learn about how to manage their activities financially and includes stories from people who’ve done it successfully
Quickbooks Cloud Accounting
Like Xero, QuickBooks wants to be a one-stop-shop for all of your business’s financial and accounting needs. The software provider has been enormously successful over recent years, thanks in part to its ability to cater to small businesses.
QuickBooks provides all of the usual services you’d expect from accounting software: the ability to track bills and expenses, insights in your business’s finances, financial reports, cash flow statements, recurring invoices, payroll services, inventory tracking, tax simplification, receipt-scanning and so on. Like Xero, it also offers different versions of its product to different groups of people.
The beautiful thing about QuickBooks is that you can now purchase it as a cloud-based service. There’s no need for installation on local computers: you can use it using any internet-connected device with the mobile app from any location.
QuickBooks also has a product specifically designed for the self-employed: real estate agents, freelancers, and even Uber drivers. The idea is to provide a super-affordable product that offers all of the accounting features that they need at a low cost.
Small businesses can also use QuickBooks Desktop – a product for companies that do not manufacture physical products. (Micro-enterprises that do make things should use QuickBooks Premier)
Other Accounting Software Products
There are other accounting software products on the market that have become increasingly popular over recent years. Fresh Books, for instance, is similar to Quickbooks in both pricing and features. Zoho Books offers a high degree of customisation, letting you issue custom invoices and so on to clients. Wave Accounting provides some pretty sophisticated bank account integration tools and employs a one-click system that enables you to categorise different transactions.
The Limits Of Accounting Software
While accounting software is handy and a massive time-saving device, you still need specialist knowledge to use it. The problem with current software is that while it’s good at categorising and scanning, it doesn’t have common sense. A software package doesn’t know why it does what it does: it just does what its programming tells it to do. Despite the grandiose claims of vendors, it still needs a human in the loop. According to research, statistics show that businesses implementing cloud-accounting in the UK is outnumbering the EU average. Nearly 42% of companies are adopting some form of cloud service in 2018.
If you’re like most small business leaders, you don’t have time to complete your bookkeeping yourself. There are just too many other things to do. It makes sense, therefore, to use a bookkeeper. A bookkeeper has all of the relevant software knowledge to quickly complete accounting tasks for your company without you having to learn how to do it yourself or rely on external accounting services.