Choosing the right accounting software is a critical decision for any small business. Your accounting software helps with day-to-day processes such as invoicing, billing, and time tracking, and offers a complete picture of your company’s financial health.
The right accounting program can help you set goals, improve your cash flow, discover red flags, and increase profits. Choosing the best small business accounting software can help you successfully run your business.
What are the Main Types of Accounting Software?
Some types of accounting software include cloud-based, manual, and desktop. There are many options to create a simple accounting process for your small business. Each method has advantages and disadvantages as each accounting program offers a different level of automation and security.
Manual Accounting Software
The manual accounting method typical involves using a spreadsheet program like Microsoft Excel or Google sheets. While it doesn’t necessarily mean sitting hunched over your desk, making ledger entries by candlelight, it is the most hands-on and work-intensive method of accounting.
Although manual accounting software was the gold standard at one time, it’s been surpassed in efficiency by other accounting programs that automate data entry like QuickBooks Online.
While manual accounting might be a cost-effective option, it can also be tedious and time consuming. It might take longer to:
- Input the correct formulas
- Make adjustments
- Input expenses and other financial data
- Find what you need across multiple sheets
Fortunately, manual accounting is only one of the accounting options available to you.
Cloud-Based Accounting Software
Cloud-based accounting is accounting software that is hosted on remote servers. It allows the user to access their data online and through multiple devices. Cloud accounting software has become the gold standard in Canada.
A benchmark survey conducted in 2017 found 67% of Canadians use cloud-based technology – a 20% increase from 2016. Cloud-based accounting software has a wealth of advantages; most importantly, it can protect your privacy and security while saving you time.
As more small businesses rely on cloud-based software to run their companies, the cost of such programs decreases. There are plenty of affordable cloud-based systems out there, like QuickBooks Online.
The advantages of cloud accounting software include:
- Greater Versatility: Cloud accounting software is an excellent tool for you and your employees. People can track their hours, note any billable time, and send invoices to customers. You can also link apps and mobile devices to cloud programs, enabling you to handle your company’s finances from anywhere.
- Better Security: Cloud-based accounting software stores information on servers in a remote location accessible only through a secure login. When no one is logged into the system, the remote server itself stores the data. If your computer fails, the hard drive malfunctions or your laptop is stolen, your financial files will be safe from harm.
- Pay As You Go: Software as a service (SaaS) companies allow you to pay for cloud software as you go. While a desktop service will have a yearly fee and may cost more, a subscription service for cloud-based software is subscription based. Plus, there is often different tiers of service, so you’ll pay for exactly what you need.
- Sync Data Automatically: When you give other programs permission to access your files and bank accounts those programs sync information with your accounting software. This means you’ll get up-to-date information from any device.
- Mobile Use: Mobile apps work with cloud-based systems to give you access any time and anywhere. Simply log in, and you’ll be able to send an invoice or estimate from a remote location.
- Regular Updates: Accounting software companies create updates to their programs regularly. Receive these updates automatically, so your software remains as current as possible.
Desktop Accounting Software
Desktop accounting software, like QuickBooks Desktop, keeps all of your data on your main computer in the office. As the owner or proprietor, you can easily control who has access to it. Self-employed professionals and small business owners can both benefit from using QuickBooks Desktop.
Desktop accounting software programs in Canada tend to offer some connectivity, such as the ability to email invoices, send messages to customers, and submit or receive online payments. These software programs can also be integrated with other programs that you already have on your computer.
The accounting program is only accessible from the computer network that it’s installed on, which means you can’t access accounting spreadsheets on your phone or laptop.
Overall cloud-based accounting programs offer the same functions as manual and desktop accounting programs but with better flexibility.
What Are the Best Accounting Software Features?
Different types of accounting software offer various features. When deciding on the best accounting system for you, some key things to think about are: how much automation you need, how much time and money you want to save, and what additional financial features you need, like payroll and time tracking. Look for the following features when deciding what accounting software to choose:
- Inventory Management: All businesses that maintain an inventory can benefit from inventory tracking software. Great accounting programs alert you when stock is low and if you need to place an order.
- Sales Tracking: Sales tracking informs you of your earnings and profit. This facet of the software also lets you know what items sell best at what time. For a restaurant, it’s crucial to know what dishes sell better at lunch and dinner so you can tweak your menu and staffing levels.
- Contacts Management: Contacts range from suppliers and partners to employees and customers, all of whom can work to increase your sales. Send people notices, invoices, purchase orders, and payroll through your contacts pages.
- Budget Creation:Accounting software analyses your numbers from the previous months, quarters, or years to derive a budget for the future. Create custom reports based on sales, profits, losses, investments, and staffing levels to chart a clear path forward through the next year.
- Estimates for Potential Customers: Cloud accounting software makes estimates easy. This feature is perfect for landscapers or anyone in the construction or renovation industry. Provide the estimate to your client, then once the work is complete, convert that initial estimate into an invoice.
- Payroll: Convert timesheets into paycheques with an integrated payroll option. Send funds through direct deposit or as printed cheques, depending on how you pay your employees.
- Income and Sales Taxes: Calculate and collect the proper amount of sales tax with cloud-based accounting software like QuickBooks Online to reduce errors and eliminate penalties for not collecting the right amount of tax. Accounting software also makes income tax time more manageable by providing your accountant with important figures needed to file taxes.
- Time Tracking: Labour costs, for both you and your employees, are a big factor in your company’s overall expenses. Track billable time so you can properly assess labour costs and report them to clients, whether you’re a mechanic, a doctor, a lawyer, or a plumber.
- Receipt Scanning: Cloud accounting wins again with receipt scanning. Simply take a photo of a receipt with your smartphone, upload it to your cloud program, and file it away into your expense ledger. This saves time versus manually inputting the figures into your system.
- Multiple Users: Manage multiple users from an administrator’s login securely. Give your accountant access to certain files, let your employees track their time, and allow accounts receivable to send invoices from specific modules within your overall software suite.
- Bill Management: Accounting programs link to your bank account, but they also pay the bills. Set up recurring payments for rent, utilities, and suppliers. Great systems send you alerts when you make payments successfully, and they update your overall financial picture.
- Invoice and Accept Payments: Send invoices to clients quickly and effortlessly. Many services, including QuickBooks, have professional invoices. Plus, QuickBooks Online allows customers to pay outstanding invoices online using a credit card.
- Bank Reconciliation: Thanks to secure connections, accounting software can transfer funds to your bank account instantly.
- Mobile Apps: If you value your time in the field or have employees who work remotely, a mobile accounting app comes in handy for your financial programs. Most small business accounting software programs have integrated mobile apps.
- Security: Rather than risk all of your data on one computer that could break down, cloud programs routinely back up your information. They also have secure logins that you control as an account administrator. A bank of servers likely has better cybersecurity than your computer system.
Consider all of these accounting features above as you choose the best accounting software for your business. Want to level up your financial knowledge? Read our guide to finance and accounting for small business owners.
Find Online Reviews
A simple Google search turns up reviews on accounting programs from many companies. However, Capterra is a website specifically designed to compile reviews on various software and computer programs; its Best Accounting Software page lists hundreds of programs, some of which have thousands of reviews. Each software is given a rating from one to five stars, with five stars being the ideal.
The QuickBooks page on Capterra shows more than 14,000 reviews with an average rating of 4.5 out of five stars. Vendors who have profiles on Capterra can respond to people who leave reviews, much in the same way Yelp works for restaurants. Use trusted review systems like Capterra to discover the top Canadian accounting software.
Ask Your Accountant Which Accounting Solution is Best
Ask your accounting professional what accounting system best for your small business. Most financial professionals have tried multiple types of accounting software and can recommend useful accounting software that meets your needs.
If you regularly work with a certified professional accountant, choosing a cloud-based system that lets you easily share your financial data. With smooth, secure access to your books, your accountant can make recommendations for your business and ready your firm for tax time.
Don’t have an accountant? QuickBooks can help you find one in your area. Speaking with an expert is always better for your business. 75% of QuickBooks Online small business customer and with ProAdvisor you can add one to your QuickBooks Online account seamlessly.
Look for Free Trials & Special Pricing
As you shop around, see if any accounting software you like offers a free trial or special pricing for new users. Subscription-based services often give you a discount when you buy a package for 3, 6, or 12 months at a time.
Alternatively, you could try a free trial of an accounting program, which usually last for 30 days. The best accounting software companies alert you in advance to let you know how much time you have left of your trial.
QuickBooks regularly offers exclusive deals and free trials to help you make a smart decision; pick your plan, and try it free for 30 days.