Define your requirements
As a small business, you may not need every software program bell and whistle. Just about all of the commercially available packages will cover the basics:
- General ledger
- Accounts receivable
- Accounts payable
- Cash management
Beyond that, however, you may need some functionality that is specific to your business. Contractors and construction firms, for example, need to be able to use the percentage completion accounting method and track revenue and expenses to the individual job. A package that will only support the cash and accrual accounting methods won’t do the trick.
Some businesses need to differentiate between LIFO and FIFO accounting, and need software that will support that distinction.
Non-profits may also need some different functionality compared to for-profit companies.
With today’s excellent virtual and remote bookkeeping technology many may not even need their own licensed software at all. By using a third-party bookkeeper’s web-based solution, rather than a locally-hosted program or app, you can eliminate the need for yet another expensive software license on your own end.
Canadian firms should use software designed specifically for Canada. It’s written with the Canadian tax code in mind. Don’t just grab the cheapest solution off of a website without checking first to see if you’re buying the Canadian edition.
Consider training and ramp-up costs.
If you are planning on using your own in-house staff to run your bookkeeping software program, you have other costs to consider besides the cost of the software itself: the cost of training your staff and transitioning to the new program.
In the short run, this can cost more than the software itself, depending on the time needed for your staff to ramp up their knowledge and become familiar with the new program.
Ease of use and documentation are important factors. Look for a quality, easy-to-grasp user manual and a good online library of training and “how-to” videos.
As your business grows, so will your bookkeeping and accounting needs. It’s important to invest in a bookkeeping software package that will grow as your business grows. You may just need a very basic package for now. But things could be very different in two years. If you have to switch to an entirely different system, and you’re doing your bookkeeping with your own staff, in house, you’ll end up having to pay your transition costs all over again. You don’t want to paint yourself into a corner.
Look for bookkeeping programs that allow you to upgrade to a premium or deluxe package – ones with more robust reporting and scaling capabilities. That will make for a smoother and more seamless transition to the more advanced program, without having to reinvent the wheel.
Another increasingly popular solution is outsourcing your bookkeeping to an outside firm. That way, you pay only for the bookkeeping services you need, and you eliminate any software training or retraining costs. Your bookkeeping vendor takes care of that on your side, and it’s invisible to you.