There are a lot of accounting programs out there and frankly a lot of them are very similar. So how do you pick one? Here are some questions to consider prior to selecting a program:
Where Do You Do Business?
If you are strictly working from an office or store front and you don't travel to art shows, craft fairs, etc you might not need the portability a cloud based program provides. However, if you find that you are traveling to client's location and need to be able to accept payments, prepare quotes, email receipts, etc a cloud based program may provide the best solution for your needs.
What Other Programs Do You Use?
Do you sell on Shopify or Etsy? Perhaps you use a program to streamline a certain function in your business or use a certain point of sale system. Certain accounting programs can connect with various other programs to make recording your transactions easier and recording errors less likely to occur. Make a list of any programs you want to connect to your accounting software.
Do You Keep Inventory?
Some programs do not track inventory, if you keep physical inventory you need to determine if you want your accounting software to track it for you. Even if you don't need your accounting software to track your inventory because it is tracked in another system (such as Shopify or Etsy) you may want a program that can pair with your inventory system to automatically input cost of goods sold into your accounting system.
How Many Users Do You Need?
How many people do you need to have access to your accounting program? If you have someone who is going to be recording sales and yet another one recording any purchases you want to make sure that you will have the ability to create enough use accounts and limit their access to only the information they need to have. Allowing an employee to access your whole accounting system and make changes in areas they don't need to is a recipe for disaster.
Do You Need Payroll Services?
This one is pretty straight-forward, do you have employees that you need to pay and will bundling a payroll program with your accounting software save you money? Do you need a program that allows employees to track their hours?
Do You Have Specific Needs?
Does your company have specific needs that your accounting software needs to cover? For example, if you are doing business internationally you may need a program that can handle multiple types of currency. If you have multiple locations and need to track sales and generate reports based on location not all programs or subscription levels can handle that. Certain industries have such specific needs that it is common for a company to utilize industry specific accounting programs that also bundle in other features. Some special needs may not be as obvious. I find it easiest to list the specific tasks that your accounting software needs to perform for you and go from there. If you expect your software to provide estimates, invoice clients, accept payments, integrate with a certain point of sale app, and track inventory by location you will have a better idea of what program can handle your needs if you make a checklist with your criteria. You don't want to go through the process of setting up an accounting program only to find it does not meet your needs.
My Big Three
Now that I've discussed the requirements you may have let's talk about the three main programs I most commonly use. Quickbooks, Xero, and Wave. Quickbooks has an online and desktop version. There are a few differences between the two and each has various subscription levels that vary in features. I typically recommend online for a few different reasons, it's portable, it's constantly updated, and if your computer crashes all of your information is easily accessible from another location. Xero is similar to Quickbooks and is an online cloud-based program. It is easy to use and some of my clients prefer it over Quickbooks. Xero also has various subscription levels with different features. While Xero and Quickbooks are certainly not the only programs available they are the most popular with small business owners. Because of this most accountants are familiar with these programs, they provide good customer service, and getting all of the information you need for taxes is simple. Wave on the other hand is what I recommend for clients working on a bare-bones budget. It is free, but does not have all of the features Quickbooks and Xero offer. It is not as user friendly and takes some time to learn to navigate, but it is cloud based and is easy to use once you learn it.
Most importantly, take the time to evaluate your needs prior to selecting a program. If you are unsure of what your needs may be reach out to customer service for the program(s) you are considering or contact an accounting professional to see what they recommend.