With new businesses come new beginnings, and nothing excites accountants like setting up a fresh set of books. Like an artist in front of a blank canvas, brand new books hold limitless possibilities, the chance to shed old byzantine corporate accounting and to step into the future of clean and clear financials.
The first step is to choose your accounting software. Which accounting solution is right for your business? You’ll be married to that system for years, so take your time to pick the right one.
How should you choose bookkeeping software?
The perfect accounting system does not exist, so choosing the right bookkeeping software for small businesses means compromising several competing demands:
- Functionality
- Cost
- Usability
- Support
Let’s dive into how each of these elements impacts your business.
Accounting system functionality
Some businesses have special accounting requirements that justify sophisticated accounting solutions:
- Manufacturing requires BOM cost accounting
- Not-for-profits require fund accounting
- E-commerce requires SaaS integrations (e.g., Shopify)
- Construction requires job costing
- Retail requires inventory management
- Clinicians require HIPPA compliance
- Professional service providers require integrated practice management systems
More features mean a more expensive, complex, and boutique system. Luckily, many businesses are simple enough to avoid such requirements.
Bookkeeping software cost
Most accounting solutions follow the SaaS pricing model requiring annual or sometimes monthly recurring payments. The exception is enterprise resource planning, or ERP systems (used by manufacturers and distributors), as well as practice management systems (used by professional service agencies) which often charge setup fees for new clients.
At the low end, you can get free online business accounting software such as Wave, although functionality is highly limited. At the high end, you may end up paying several thousand dollars per year for an ERP license.
Ease of Use
Good user experience is key to efficient and error-free bookkeeping, but keep in mind that a trained accountant requires a different UX than a CEO. Startup founders find Xero much easier to use than Quickbooks, but professional bookkeepers move much more quickly in QBO. If you are planning on hiring an outsourced bookkeeper, ask them which software they prefer to use. Going against their preference will hurt their productivity.
No matter the system, a SaaS solution will update its UX to stay relevant. Compared to an installed ERP software solution that will age over time, eventually “feeling clunky” to your accounting team.
Level of Support
When your bookkeeping team encounters issues, will you be willing to sit down and try to figure out the solution? More likely a busy business owner would like their team to solve their own problems. That is easy with common bookkeeping platforms like QBO, Xero, and NetSuite where a simple Google search yields solutions to every problem.
User support is much less prevalent with boutique solutions like Zoho, Oneup, or Freshbooks. On these smaller platforms, bookkeepers could spin their wheels for days or spend hours on the phone with support trying to solve issues. You’ll also be hard-pressed to find a bookkeeper experienced with fringe accounting solutions, whereas thousands of accountants are experienced at QuickBooks.
What is the best bookkeeping software for my small business?
Based on our criteria (functionality, cost, ease of use, and support) we have selected the following as 2024’s best bookkeeping software for small businesses:
QuickBooks Online – Best all-around small business
Cheaper than an ERP yet highly functional, QBO checks the boxes for most businesses including e-commerce, SaaS, and professional services. As the most popular accounting software in the USA, QuickBooks also has vast user support resources including YouTube videos, Reddit forms, and free phone support with screen sharing.
Nearly every SaaS application in the world integrates with QBO, meaning you can bolt-on additional solutions like bill.com or Gusto as your company grows.
NetSuite – Best ERP System
Although accountants have a love/hate relationship with all ERPs, NetSuite stands above the rest for its extensive functionality, solid usability, and decent support. Since NetSuite is highly customized to each client, they do not benefit from the same user support as QuickBooks.
NetSuite is expensive – at least $30k out the door – so you may want to start your business on QBO and upgrade when revenues support the investment.
Microsoft Dynamics gets an honorable nod for continuing to improve its user experience and integrations.
Practice Management Systems
Some practice management systems, like Clio, boast robust bookkeeping capabilities. Others do not. Bookkeeping service providers will advise you whether you should use a PMS’ books or keep separate books.
Final thoughts
When choosing bookkeeping software, you should include your accounting team in the decision. After all, they will be the ones using it daily.
Do not overpay for functionality you do not use. In accounting, the simplest solution is often the most robust.
If you get stuck or are unsure how to move forward with online business accounting, reach out for help. Professional bookkeeping services offer a fast and uncomplicated way to set up the right online business accounting solution and move your company forward.
This article was written by a CFOshare employee with assistance from generative AI for rhetoric, grammar, and editing. The ideas presented are a combination of the author’s expertise, original ideas, and industry best practices.
