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Choosing The Best Accounting and Bookkeeping Software

By Finaloop Team
January 23, 2020

Talking to the founders of various eCommerce companies, we have learned that many of them are not familiar with all financial tasks and obligations associated with running a company. You already need to familiarize yourself with marketing, sales, logistics, work with technology that it's hard to focus on and learn how to properly maintain the books.

Many of the people we spoke with mentioned that they feared the dreadful and menial work of managing the books and accounting records. Approximately 40% of business owners said the worst part of running a business was the bookkeeping and tax filings. Not surprisingly, one of the very first processes to be outsourced in a new company is the financial operations, such bookkeeping, accounting, back office tasks and taxes.

From time to time, Finaloop gets questions about accounting and bookkeeping software. To help our customers we researched dozens of accounting software programs and put together a list of some of the best ones we found, with a short explanation about each. It is important that the accounting is always done right, as bad accounting and bookkeeping can make or break a company.

There are a few important things to consider when choosing the right accounting software, its usability, what features it offers, and how much is costs.

Usability: How many people need to access the information and where do they need to access it from?

Multi-User Support

If you opened a small home based e-commerce business 5 or 10 years ago, you were probably using a desktop based accounting system, where you pay a one time licensing fee and can download the service to your computer.

Today, desktop based accounting systems have all but disappeared, as the world moves to a completely cloud-based method of operating. Most of the top accounting programs are cloud-based, and as a general rule, we recommend you only use a cloud-based program. Cloud based systems make your information easily accessible from multiple locations, and provides you with information backup in the event of a computer crash.

However, even when using the cloud, different companies offer you different options in terms of users. Some will only offer you 1 or 2 users free of charge, and some may offer you many more. If you work alone, you may not need to grant access to your accounting records to another person. However, if you have employees who help you with the record keeping, and you want to perhaps limit their access to sensitive information, you may want an accounting software that grants you more user accounts and offers the ability to restrict their access to specific pieces of information.

Multi-Business Support

If you have more than 1 business, you may want to manage all your accounting from 1 integrated program, rather than having separate programs or accounts for each company. Some programs also offer multi-business integration options, allowing you to manage everything from one place. (e.g., Freshbooks has a good multi-business platform for new small and medium sized businesses.)

What kind of accounting features do you need?

Basic Features

If you are just starting out or running a traditional small side business, you may not need more than the most basic features like invoicing, income and expense tracking, financial report generation, accounts payable, and issuing receipts. If you are selling products, you may want a program that offers features allowing you to track inventory and automatically reorders for you when you drop below a set threshold. These are all features to be aware of when deciding which system to use.

Third Party Integration

Many businesses, especially eCommerce businesses, tend to use various applications to conduct their various business tasks, such as POS (Point of Sale), payment gateway (i.e. credit card processor), inventory tracking and more. Therefore, it is important to have a software program with good third party integrations. Third party integrations allow the software program to access your other accounts and applications, to extract necessary information, and put it all together for you in one place.

No matter which accounting software you choose, the most important part is being able to connect your software with all of your other information and applications, such as bank accounts, payroll services, POS, payment gateway and more. It is incredibly time consuming manual labor to constantly check that every database matches up, and the information in one system matches the information in another.

Tax Features

No one likes paying taxes, and we like preparing and filing our taxes even less. Some programs offer features that help you with sales tax collection, calculating multiple tax rates across numerous jurisdictions, and certain other tax reporting features. Some programs also assist you with tracking payments to 1099 vendors and tax filings.

These programs typically allow you to grant your accountant and other third parties direct access to the data and files, making tax prep significantly easier for everyone. However, remember that the process of bookkeeping and tax preparation is still done manually by bookkeepers and tax preparers, which can be very expensive and time consuming. Finaloop can take care of all the bookkeeping and tax work for you by automating this process, saving you thousands of dollars and hundreds of hours of work.

How Much Does Accounting Software Cost?

This is of course something that cannot be ignored. As with everything in your business, what is your budget for an accounting software? Knowing this will be helpful later when deciding which features are most important, and which you might need to forgo for a while until your business grows more.

Accounting software costs vary depending on how many users are supported, how many features are included, and other such factors. Some programs are only offered online using cloud-based software, and some allow you to download the program and sell software licenses so you can use the software directly on your computer, and some offer both. Cloud-based software programs typically charge a monthly subscription fee. Cloud-based programs typically range from $10-$60 per month, however high end programs can cost much more.

Several companies offer a free version of their accounting software. These free programs are usually very limited and offer only basic features, such as limiting the number of users, clients or transactions. These programs typically make their money from paid add-on services they offer, such as a 1-3% fee on payment processing. These programs are useful if your business is very small or you have a tight budget, and need something to get you started. You can purchase add-ons or switch companies later on as your business grows.

Some of the more expensive plans include advanced features such as project tracking and billing, expense and sales tracking, recurring invoices, inventory tracking and automatic reordering, automatic past-due reminders, and purchase ordering.

When choosing your accounting software, it is important to also take into consideration the added cost of hiring a bookkeeper or accountant to extract the information from your software and prepare your legal and tax documents.

Our Top Reviews

  • Wave is good for small businesses just starting out. The basic service is free and provides basic accounting features to help a small company get started, but as your company grows, you will need to switch to a better accounting software. Wave has very limited third-party integration services, making it a less attractive choice for a growing company in need of more services.
  • Xero is good for small to medium size companies with large amounts of inventory, especially different items, and high turnover. Xero is good for new e-commerce businesses. Xero has some good third party integrations allowing for a smoother accounting processes.
  • Freshbooks and Zohobooks are good for professional services companies, such as lawyers and accountants, providing you will time management features for individual projects so you can bill by the hour. They are geared towards people who are self-employed and very small businesses.
  • Sage and Quickbooks are geared for small to medium sized businesses of all kinds, offering a wide array of features and services. Importantly, these programs are easily scalable which allows you to grow smoothly without interruption in your accounting practices. While Sage has a few third party integration options, Quickbooks has by far the most third-party integrations, more than double its next competitor.
  • Netsuite is geared for some of the largest companies, built for medium and high volume transactions. It is specifically geared for companies with very large number of employees, and are often multi-national companies or have international subsidiaries. Typically as companies grow, they will switch to netsuite.

Conclusion

As with everything, you can always elect to save some money and do the accounting work yourself using one of the top reviewed software. However, you need to make sure that you are fully familiar with complex accounting principles, and of course tax regulations and filings.

If you are an eCommerce business, Finaloop can do all of your bookkeeping and tax preparation, making the process simple and painless for you. With access to your Finaloop dashboard, you will always have immediate access to the most updated and important financial information about your company.

Like you, we at Finaloop had many options to choose from, and ultimately we chose to use Quickbooks as the underlying platform for backing up our customers' information. As part of Finaloop's 'Leave with No Pain' guarantee, in addition to the Finaloop platform, we maintain a Quickbooks account for each of our customers. If a customer ever decides to discontinue our service, all the financial data is organized for our customers in a Quickbooks account allowing smooth, safe and secure transition from our service.

Finaloop allows you to simplify and streamline all of your accounting processes, allowing you to spend more time doing what you love, running your business.

The information provided on this website does not, and is not intended to, constitute legal advice. All information, content, and materials available on this site are for general informational purposes only. Readers are advised to consult with their attorney or accountant with any questions or concerns.

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