Accounting software is used to do bookkeeping or accounting. When you run your own business, it can be a practical necessity.
An accounting software is a digital tool where you or your accountant can manage your business’ finances.
Some are fully online, while others have to be downloaded and installed on your laptop. Some also offer mobile apps so that you can do your accounting—or parts of it, like tracking expenses— on the go.
An accounting system can be used to create budgets, run payroll, and create detailed reports, although there might be an extra charge for this.
While you don’t necessarily need to use software, it does make the job much faster and easier. You also have to report your business’ financial status to the tax authorities, and in some cases they require you to have accounting software to do this.
How do I choose the right accounting software?
It choose depends on several things:
- The industry you operate in. Some industries, like agriculture, have specific accounting rules that require tailored accounting software.
- Your knowledge of accounting. If you’re new to it—and you plan to do it yourself rather than getting an accountant—you should make sure to opt for user-friendly solutions made for small businesses, contractors, or freelancers.
- Your price point. You might not have a lot of cash at the start, and you might need to juggle a lot of purchases. You should shop around to find a cheap accounting software that covers your needs. If you’re unsure of what to go for, you can make use of free trials to test them out.
- How you plan to do your accounting. If you plan to do parts yourself and outsource part of it to an accountant, you need to be able to add several users.
If you plan to hire an accountant, they might have their own accounting software that they prefer to work in.