Choosing the Right Accounting Package

Choosing the Right Accounting Package

The first step you need to take in choosing accounting software for your business is to undertake a good needs analysis, which will address both managerial and financial needs. It should be broad, exploring both obvious questions and ones that really make you think. Take your time with this important step, since the last thing you want is to have to repeat this process within the next two years. If you experience unexpected growth that forces an upgrade, terrific, but good planning at this stage can help you avoid having to change software too soon. Get some help before you buy anything.

What you need to know about your business

The first step you need to take before deciding on accounting software is to make sure that you are somewhat financially literate. “One of the mistakes businesses make when they buy accounting software is in believing that they don’t need to know anything at all about financial accounting software .

There are several ways that an entrepreneur or small business executive can become proficient in understanding what data their business needs to keep (in order to make better business decisions) and what reports they need to generate (for the Internal Revenue Service and state tax authorities). You can read books. You can take classes. You can do research on the Internet. “You can’t use any accounting software if it’s like garbage in and garbage out,” Pinson says. That’s what the result is “if you don’t understand what you’re putting in.”

Another consideration is the type of business you operate. Several different sectors have specialized modules or add-on packages because they need to keep specialized data. If you are a manufacturer, for instance, then you may need to have an understanding of inventory and handling of parts and labour. If you are a retailer, you may also need to have an understanding of your inventory through a point-of-sale program. A doctor’s office needs specialized programs for billing insurance companies, although many may farm this function out to middleman and/or consultants.

Talk to your accountant and staff

If your business has an accountant — either an outside consultant or an in-house accountant — you would be wise to consult that expert before you take the plunge into accounting software. Your accountant may be able to recommend software that works with programs they have. In fact, Pinson says, some accountants may help you set up your accounting software so that it gathers the data that they need to help you file your taxes, as well. “They know what kind of business you have and what you need,” Pinson says. “Most accountants work with a particular software. Frequently it’s QuickBooks. They’ll want you to use that same accounting software.”

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