Best Accounting software of 2020
Ranking the best accounting software
Accounting software helps businesses track and manage financial transactions.
Managers, accountants, top-level executives, and other decision-makers rely on the information they get their accounting software solutions to assess the performance and financial health of their businesses.
Accounting software solutions differ in scope, features, cost, and functionality. However, they all share certain commonalities like basic accounting modules, journals, general ledgers, accounts payable, accounts receivable, payroll, invoicing, and trial balance.
Businesses use accounting software solutions to remove the tedium of keeping their books and managing their financial reports manually. Companies can keep accurate records, perform automated calculations, and generate financial reports right from their accounting software solutions.
Why Use Accounting Software?
Businesses use accounting software to minimize human error, save time, and increase productivity. Today’s business environment is more complex and less tolerant of errors. Hence, businesses turn to account software solutions to do their taxes, ensure compliance, and manage all the modern financial complexities of running a business.
Accounting software performs automated calculations and simplifies accounting. So users can record business transactions, generate reports, and monitor their business performance with ease.
For most small businesses, using accounting software eliminates the high cost of hiring an accountant in-house. Your accounting software automates the bulk of your business’s accounting operations. Printing and storing documents also come at a cost to businesses, and with accounting software, you can reduce your overhead cost.
Accounting software provides accurate reports about revenue, costs, profits, losses, and more. It also reveals the financial trends and patterns of your business. With this information, you can make accurate forecasts and make the right decision that will steer your business in the right direction.
If you want to increase productivity, you need to get more done in less time. Good accounting software allows you to handle critical business processes like inventory management, billing and invoicing, etc. in less time. Most importantly, you can focus on other essential activities, make smarter use of resources, and increase operational efficiency.
Without accounting software, you are at risk of fraudulent activities that may go unnoticed. These activities may cause revenue leakages and legal issues that will harm your business in the long term.
Accounting software can help to prevent fraud by flagging inconsistencies and anomalies in the system. Top executives can monitor the movement of funds and financial transactions in real-time. Furthermore, using accounting software fosters transparency and helps businesses avoid recurring and costly human errors.
Filing business taxes can be very cumbersome, and failure to do so will attract fines and penalties. For businesses to accurately file their taxes, they have to monitor their business transactions closely. Accounting software helps companies to consolidate their financial operations and comply with their governments’ tax requirements. Accounting software has integrated features that automatically calculate taxes based on applicable taxation laws in any jurisdiction.
Financial data security is essential irrespective of the size of the business. Accounting software has an extra layer of protection to secure your financial data from compromise, corruption, and loss.
Who Uses Accounting Software?
Accounting software is a valuable tool for any person or organization to manage their business finances. This software has become an essential business tool, as 60 percent of small business owners admit that they are not very knowledgeable about accounting and finance. Considering that small businesses make up 99.7 percent of all business, accounting software solutions can be considered vital to business success.
Chief Financial Officers (CFOs)
CFOs use accounting software for financial record-keeping and planning. The software helps them monitor and manage cash flow, business performance, assets, liabilities, and budgets. More so, they rely on the software to assess the financial health of their businesses and to make informed business decisions.
Finance managers count on accounting software to review their organization's financial reports, track accounts, make ready financial activity reports, and draw financial forecasts. This job role requires analyzing markets for business growth opportunities and investigating potential profit-boosting initiatives.
Certified Public Accountants (CPAs)
CPAs work as financial auditors, accountants, and businesses consultants, hence they rely on accounting software solutions for their duties. Corporations, small businesses, and individuals hire certified public accountants for a wide range of services from tax to financial planning. As auditors, CPAs use accounting software to evaluate and verify the accuracy of a company's financial record.
As the name implies, tax accountants coordinate the preparation and filing of government taxes for organizations. They use accounting software solutions to help them eliminate errors and improve efficiency. Tax accountants may be independent consultants or hired by a firm in-house. All tax accountants must have valid CPA licenses.
Accountants may work in-house for firms or manage their independ practices as consultants, all accountants use accounting software to execute their duties. Staff accountants are responsible for bookkeeping, managing financial records, and coordinating budgets. Accountant roles may be in any of these three specialities government, public, and management accountants.
Accounts Payable and Receivables Specialists
Accounts payable specialists rely on accounting software for inventory management, payroll, and financial reports. They report and manage all outgoing payments of a business and rely on accounting software solutions to manage those payments efficiently and without errors.
Accounts receivables specialists ensures collections for businesses. They process and monitor the company’s bills, make collection calls, send any follow up statements, and prepare relevant reports. Personnels in this role depend on accounting software to execute efficiently and flawlessly.
Freelancers, small business owners, and startups
Startups and freelancers with little accounting experience need accounting software to streamline important tasks like quotes, invoicing, and expense tracking. They also need to keep accurate records before it becomes overwhelming to the point of losing track of vital financial data.
Small and mid-sized businesses also use accounting software to handle end to end accounting processes like inventory management, tax-filing, payroll, and financial reports.
More Accounting Software Users
Nonprofit organizations are not left out. They receive grants, donations, and allocations. Therefore they need accounting software to create budgets, manage spending, appropriate funds, and prepare financial reports.
Any individual or person organization that receives or makes payments frequently will benefit from accounting software as they must manage their books, reporting, and taxes. Accounting software helps organizations raise invoices, record financial transactions, and prepare financial reports.
Accounting software provides tools for users to create and send pricing estimates, invoices, and receipts to their customers. Businesses use Accounting Software to create quotes, estimates, and proposals that specify the details of their product or service, quantity, and cost of service delivery. These documents may also include other information like terms of service, shipping information, and more.
Businesses would send quotes or proposals to their customers, receive approvals for them, and then send proforma invoices for those products or services. Some accounting software solutions integrate with payment gateways to allow businesses can accept payments right within the accounting software. The software automatically generates and issues receipts when businesses receive their customers’ payments.
Accounting software helps businesses track their account receivables and any balances that third parties owe them. Keeping track of what suppliers, customers, governments, and business partners owe to a business can help increase liquidity and maintain positive cash flow. In practice, accounting software would record account receivables, send reminders to both creditors and debtors, and provide any supporting details about the debts.
When a creditor’s account receivables go beyond the accepted threshold, they can send reminders to debtors to ensure they get paid faster. Reminders have proven powerful as 32 percent of debts are paid on the third reminder, 20 percent on the second reminder, and 21 percent on the first reminder.
Accounting software helps businesses track their accounts payable to monitor what they owe their creditors, suppliers, and the government. This feature lets organizations record customer credits, view pending bills, and outstanding payments. Furthermore, accounting software sends reminders so that companies make timely payments to avoid fines and penalties.
Paying bills may not be the favorite part of running a business, but it supports vital business relationships and inspires trust. Moreover, businesses that pay attention to their accounts payable are less likely to fail as 82 percent of businesses fail because of cash flow mismanagement.
Accounting software allows businesses to connect their bank account, monitor transactions, and automate their billing process. This feature simplifies the process of reconciling transactions with banks. Users would connect their accounting software to their bank account to fetch data and reconcile financial transactions in a few minutes. Furthermore, they can import real-time data and process transactions in bulk, including creating item categories, editing, erasing, and restoring data.
By integrating with multiple payment gateways, accounting software solutions can help businesses finalize transactions in real-time. The high automation here can be a real saver as processing invoices with low automation costs businesses 20 times more than when they do it with high automation.
Accounting software helps businesses streamline their operations by recording real-time stock changes and setting inventory management controls. Businesses rely on the use of accounting software to manage their inventory, minimize the cost of holding stock, and avoid stockouts. They can organize stock, set inventory levels, and capture product information like SKU, images, units, and more. Accounting software helps businesses track the items in their inventory, and alert them of when to replenish that inventory. Moreover, businesses rely on the data they get from their accounting software to allocate funds and do their budgeting.
Accounting software helps project managers and team leaders to track and bill time for projects. Managers can assign project tasks and track the attendance and time spent on each task. Accounting software solutions can track single and multiple projects for billable time. It uses a logging feature to capture the work hours on specific projects so that businesses can calculate their payroll and report their tax accurately.
Compliance is another vital feature of accounting software solutions. Every year, 40 percent of small to midsize businesses incur an average of $845 in IRS penalties for violating payroll-related filings.
Moreover, businesses can simplify how they capture their employees’ salaries and wages using their accounting software. The software helps them collect information on job statuses, payroll-related bills, and other employee-related expenses associated with their projects. Talent-sourcing agencies can also use their accounting software to raise estimates, issue invoices, and accept payments.
Accounting software solutions generate multiple reports to help users make informed and accurate short and long term business decisions. These reports provide accountants and business managers insights into their financial activities, financial position, and business performance. These accounting software users are able to retrieve financial reports on payroll, inventory summary, accounts receivable, accounts payable, income statements (profit and loss), statements of cash flow, balance sheets (assets, liabilities, and capital).
Managers and accountants can use accounting software to generate custom reports for any specific needs. They can define date ranges and filters to gain insight into specific financial activities.
Data visualization is another strength of accounting software. Interpreting large numbers and data can be overwhelming; that’s why accounting software solutions come with data visualization capabilities. Using these visualization features, managers and accountants can quickly spot trends and understand their business performance.
Accounting software users can export reports in multiple formats like PDF, CSV, and plain text. These users can also share data as necessary. Moreover, they can print hard copies for internal or external use.
Accounting software helps businesses prepare accounts that are tax ready, so businesses rely on them to manage and streamline their tax reporting. A key benefit of using accounting software solutions to manage individual and organizational tax reporting it that you can eliminate reporting errors, remit your taxes on time, and avoid fines and penalties.
Moreover, individuals, accountants, and business managers can leverage accounting software solutions to perform automated, simple, and complex tax deductions and documentation. Furthermore, users can generate tax reports based on applicable tax regulations in the countries they operate.
Q: What is the best online accounting software?
A: There are lots of excellent online accounting software in the market. Choosing the best online accounting software depends on your business size and your accounting needs.
However, a good online accounting software solution should be easy to use. It should provide automated accounting solutions like billing and invoicing, inventory management, financial analysis and reporting, automatic tax deduction, and more.
Apart from the features highlighted earlier, online accounting software should be flexible enough to allow users to monitor and record transactions on the go. Also, if you have medium to large teams, you should go for accounting software that has multiple user capabilities and supports collaboration across local and international teams.
Good accounting software should be scalable. Users should be able to upgrade and access more advanced features as their business grows.
Organizations may face the risk of data loss due to fire or theft, so online accounting software should provide cloud data backup and recovery options. More important than accessing the software easily, online accounting software must have security features to protect organizations from data theft, loss, or compromise.
Q: How much is accounting software?
A: The cost of accounting software ranges from a few bucks to thousands of dollars. How much you will have to pay for accounting software depends on the features that interest you. Many software vendors offer different pricing plans with different capabilities. And while some vendors offer different durational payment options, others base their pricing on the method of deployment.
The good news is that you don't have to break a bank to afford accounting software. The freemium pricing model allows users to access the software for free but with minimal features and pay fees to access advanced features.
For organizations that do not want to commit to long term payment, monthly subscription may be their best bet. Prices may start from as low as $3 for starter plans. Mid-level plans may start at $7, and premium plans may start from as low as $10. However, some accounting software can price a lot higher, going for higher than $1,000 for a license or almost $400 per user per month.
Accounting software providers offer annual, monthly, and usage-based payment options. They also offer incentives such as discounts and coupons to encourage businesses to make long term commitments. Large organizations use enterprise accounting software that has advanced capabilities and supports powerful customization and automation.
Q: What is good accounting software for small businesses?
A: If you're running a small business, it is crucial to keep track of your finances but much more important to keep expenses low. Therefore, you need to find accounting software that offers the features you need and fits your budget in the long term.
Good accounting software for small businesses should be affordable and easy to use. Furthermore, it should support essential accounting processes like income and expenses tracking, quotes and billing, tax, banking, reports and analytics, and more.
Therefore good accounting software should offer features to help businesses record financial transactions, monitor revenue and expenses to track their finance and tax records correctly. Growth and sustainability are vital business goals. So a good accounting software should be flexible and scalable to support business growth.
Q: What is ERP accounting software?
A: An enterprise resource planning (ERP) accounting software is an integrated solution that supports and helps companies manage business processes, including inventory, manufacturing, customer service, human resources finance and accounting, marketing, human resources, and more.
Traditional ERP software systems are costly, and therefore only large businesses can afford them. But over the years, ERP software has evolved into a solution for businesses of every size. ERP accounting software helps companies grow and remain sustainable. They can streamline critical business processes and help users boost productivity.
Q: How to create accounting software in excel
A: Microsoft Excel is a spreadsheet program that is used for accounting. It allows you to perform calculations and supports both basic and advanced accounting functions. When compared to advanced accounting software, they may not perform automation. But if you have a small business, it is an excellent place to start. Therefore you can start managing your financial transactions by using customized Microsoft Excel accounting templates.
Q: What are the emerging trends in accounting software?
A: There is massive growth in the adoption of cloud-based accounting software. Accountants are giving up software packages with strictly offline capabilities. Another emerging trend is the advanced automation of more accounting modules to minimize human involvement and improve accuracy.
The focus on big data and advanced data analysis is an emerging trend that is worth the mention. Advancements in database technology and data centers have inspired the use of big data and data mining techniques to aid management decisions. Accounting software will be at the forefront of these advancements as it is a crucial business decision tool.
The world is shifting from desktop to mobile technology. With the dominance of cloud-based computing, accounting software will have more mobile capabilities to allow businesses to handle accounting processes on the go.
Q: What are the different types of accounting software?
A: There are diverse types of accounting software ranging from electronic spreadsheets to custom solutions.
Spreadsheets are the most basic type of account software. Spreadsheets are simple solutions that allow users to record financial transactions manually. Although it supports multiple customizations, automation options are limited.
Another category of accounting software is commercially available or off the shelf solutions. Small and medium-sized businesses can customize the accounting software in this category to meet their needs. They can keep financial records and automate critical key accounting processes. Access to this software may be subscription-based (online) or outright purchase of a license and for offline use.
The third type of accounting software is the ERP software, which has a complete suite of tools to manage multiple business processes. It controls the day to day activities, including manufacturing, suppliers chain, accounting, project management, human resource, procurement, and more.
Custom accounting software is another category of accounting software that is mainly used by large corporations. It is built with powerful automation and customizations to suit the needs of the organizations that use them.
Q: What is cloud accounting software?
A: Cloud accounting software is an accounting solution that is hosted on the cloud or remote servers. In contrast to on-premise accounting software, users or business teams can access the software from any internet-enabled web or mobile device. And they can make monthly and annual subscription payments to use the solution.
With this model, the company's financial information is securely stored in the cloud. Many accounting service providers provide security features to ensure records are safe. This ease of access probably explains why 67 percent of accountants favor cloud accounting software over on-premise solutions.
Q: Can accounting software help reduce costs?
A: Yes, accounting software can help you reduce costs. Without accounting software, you may have to hire and keep an accounting department even if you are a small business with minimal resources. Accounting software can handle multiple accounting operations in a short time. Using accounting software solutions can help businesses reduce human resource costs.
Manual billing and invoicing come at a considerable cost to your business. You will have to incur extra costs to send invoices to your customers. With accounting software, you can submit quotes, bill customers, and receive payments within a few hours.
Your business may incur substantial financial losses due to incorrect data entry that has gone undetected. Similarly, fraud-related activities may cause financial problems and draw the attention of the IRS. So, using an accounting software solution helps businesses detect errors and fraud on time.
Q: How can accounting software help a business?
Accounting software helps organizations record and organize their financial data and automate their accounting processes. Businesses can generate error-free reports that show them their financial health and position. With accurate metrics and reports, they can make informed decisions and take action. Furthermore, accounting software helps businesses comply with statutory tax obligations while saving them time, costs, and increasing productivity.
Q: How accounting software improves productivity?
A: Manual accounting takes a lot of time and resources. With accounting software, you can cut down on the number of hours spent on handling accounting tasks. Accounting automation can lower the time it takes to process an invoice from 20 days to three days. So accounting software users can complete more tasks in less time. More so, they can quickly generate and understand their performance reports, which translate to making accurate business decisions faster.
Q: When do I need accounting software?
A: The chances are that as your business grows, you may become overwhelmed with using spreadsheets for manual manage billing, income, and expenses tracking. If you struggle to keep track of your accounting operations, including late tax filing, you are already at the stage where you need accounting software to help manage accounting tasks.
With an easy to use accounting software, you can bill customers, receive payments, and reconcile transactions. Furthermore, this software can automate critical tasks, hence freeing up time for users to focus on vital business activities.
Q: What accounting software do churches, and nonprofit organizations use?
A: Churches and nonprofits should use accounting software that has membership and donation features. Nonprofits and churches use accounting software that has modules for managing donations and fundraising, expense tracking, accounts payable, and other features in regular business accounting software. With accounting software, charities and churches can track the donations they have received over time, prepare budgets and financial statements, and do their tax reporting.
Q: What accounting software works best with Shopify?
A: If you run an online store like Shopify, you need accounting that supports integration with Shopify. With seamless integration to Shopify, accounting software allows merchants to create invoices, monitor stock levels, and manage inventory in real-time. Essentially, most accounting software provides a connector app to capture transaction information and automate your accounting operations in real-time.
Q: What type of financial reports can I get from accounting software?
A: There are several reports you can get accounting software. You can generate reports like sales, assets and liabilities, undeposited funds, tax reports, and more. Accounting software also generates standard reports such as inventory and stock level reports, accounts receivable and accounts payable, income statements, statements of cash flow, balance sheets, bank transactions, and more.
Q: Can I use accounting software on my mobile device?
A: Yes, some cloud-based accounting software allows you to perform accounting operations on your mobile device. Although the accounting functions may be limited, you can handle basic processes like creating estimates and invoices, confirming customer payments, and monitoring expenses.
Accounting software is an invaluable resource for businesses and nonprofits. It allows organizations to track financial transactions, analyze and generate financial reports with ease. Accounting software automates tasks and helps businesses increase productivity. More so, through timely and accurate reporting, companies can make better decisions and take more intelligent actions. Regardless of the size of your organization, you will find accounting software that fits your budget and can provide immense value to your business.