In the ultimate irony of business, counting your money is fun but accounting for it isn’t. Fortunately modern accounting software takes most of the pain out of accounting and makes a fast up-to-the minute money count for you too. The problem: how do you pick the program that’s right for you?
First you need to decide whether you want to use cloud-based accounting software or traditional, on-premises software. Online accounting software updates automatically (at no extra charge), and you pay a lower monthly subscription, which reduces your up-front costs and makes predicting expenses easier. You buy traditional, on-premises software outright and install it on your network server or PCs. Although you own it forever, it becomes outdated pretty fast.
Yes, it’s a twist on the lease-versus-buy argument, but when it comes to software, there’s no equity and resale value to consider in the equation. It’s simply a matter of either paying a little every month for the rest of your business’ life or paying a lot at once and owning the software outright—until you pay a lot again for the next upgrade version.
Accounting for Hidden Fees and Hidden Savings
But that’s not the only cost to consider. You may need an actual accountant too (be honest, you know you do), for tax filings and such. And, if you grow big enough, you may need a comptroller too. Gee, who knew having money cost so much money?
If you do use an accountant, check with her first before you buy to see if she has any software preferences. If she does, you might have to fork out a little more cash to play the match-the-accountant's-software game, but you could score big in savings on accounting fees as a result.
However, you may find some accounting software offers more bells and whistles than you can use or afford. What sense does it make to spend more money on software than you earn? None, right? But choosing the cheapest accounting software doesn't make sense if it won’t scale as you grow or, worse, leaves you sitting in an IRS auditor’s office.
The moral of the story here is that you really can’t afford to choose your accounting software based on costs alone. Take a serious look at your business accounting needs now, consider what they might be in the future, and then decide on the software based on that information. If you’re unsure what those needs are, seek guidance from your accountant.
The Lowdown on Free Accounting Software
Let's say you’re a freelancer, or you own a company that’s a money drain at the moment; or maybe you own a startup in the phase before start or up. In those cases, free accounting software may be your best or only alternative.
Just be aware that when you do start making real money, you might have to bail on the freebie and move to something with more accounting muscle. Or you might not. It depends entirely on your needs. For example, if you own a dead-broke startup and an angel investor shows up with a pile of cash, then you might want to switch to another accounting system first.
If you're in the market for free accounting software, take a serious look at these options.
This multi-user, multi-company, and multi-currency double-entry accounting system has a sales ledger (accounts Receivable), purchase ledger (Accounts Payable) and a general ledger. It also offers inventory, purchase order, sales invoicing, human resources, and payroll processing. Free vertical modules, such as for the retail and restaurant trades, make it easier for people in those trades to process and pull numbers specific to their operations.
2. TurboCASH 5
This open source accounting software is easy to use even if you don’t have an accounting background. It's available in 25 languages and covers more than 80 different tax regimes. It contains standard accounting features, and its user-community numbers more than 100,000 strong and counting.
Figure 1: TurboCASH 5 small business accounting software.
This accounting software is highly customizable, offering a hundred possible combinations in customization. You can even turn on and turn off features so that you end up looking at only the information you need and not a lot of empty fields instead. It contains standard accounting features.
This very comprehensive accounting program also offers customer relationship management (CRM) and enterprise resource planning (ERP) capabilities. A number of modules allow you to build the system to your liking.
You can link this software to your banking, Paypal, or other money accounts, and it will automatically fill in the appropriate accounting field for you. It can also generate accounting reports as well as perform standard accounting.
Figure 2: Wave small business accounting software.
This one is just about as easy to use as a checkbook register. You can track bank accounts, stocks, income and expenses on this software. It is a double entry system with lots of powerful tools and report generation capabilities. GnuCash even has tools to help you find wrong entries and errors.