Accounting software helps simplify your work by monitoring and tracking the financial health and cash flow in your business. This type of software can help you create payments, track expenses like payroll and equipment costs, and generate reports that can assist in analyzing your business from different perspectives. Others can help you monitor your bills, supervise your projects and manage your inventory. Below is a guide listing the benefits of accounting software and different types, which you can use to find the best kind for your business.
Benefits of Using Accounting Software
- Calculates the journal entries automatically for both the loss and profit statements and balance sheet.
- Data obtained can be quickly sent to your accountant and auditor. The software has essential tools and functionalities that can help you carry out financial analysis.
- Can give ideas or suggestions related to the financial performance of your company.
- Since the journal entity, financial statements and invoices are printed automatically, and in a professional format, it makes it easy for the accountant to use and for auditors to read the data.
Main Kinds of Accounting Software
All businesses regardless of size should make use of the following accounting software:
1. Database Accounting Software
This type of software targets big companies and banks—that is, multi-million dollars companies. An example of this accounting software is Oracle. For the software to start working in your business, you have to hire a systems engineer to install it.
Advantages
- Can handle more complicated tasks, financial management, extensive network, and sophisticated accounting tasks.
- Makes sure your data is secure
- Flexibility—you can always edit the data.
Disadvantages
- Expensive
- Requires high costs for maintenance
2. Installed Accounting Software
If your company is located in an area with a slow and limited internet connection, then your business can take advantage of this installed accounting software, which comes in the form of CDs or DVDs which you then install on your desktops or laptops. This type of software targets SMEs and startups.
Advantages
- Multiple accountants can use it
- Easy to install
Disadvantages
- Almost impossible to use in different locations
- Hard to customize
- A limited number of users who can use this software due to the restrictions by the programmer.
- Data is only available on your desktop or laptop but not online making it impossible to share with others.
3. Cloud Accounting software
This type of accounting software is based online, which means that data stored by any cloud accounting software can be assessed through the cloud, via a wireless or data internet connection. It targets small to medium-sized enterprises and startups. Examples of cloud accounting software include QuickBooks, FreshBooks, Xero, Premium Accounting 2015, and Sage 50.
Advantages
- Less expensive compared to other software
- Data can be easily accessed since it is online.
- If your bank account is online, you can connect it
Disadvantage
- For you to use it, you need to be familiar with its functionalities
For startups, FreshBooks is an excellent choice since it has a 30-day free trial that allows you to test it first and buy later. It’s also easy to make and send receipts and bills to customers. One excellent feature of this software is that you can export the data to QuickBooks. QuickBooks is best used in small business since it makes accounting easy, manageable, and simple. Xero is fit for small and medium-sized companies since it has functionalities that allow teamwork when making financial statements.
Based on the software functionalities you want, choose the software that best fits your company. You can research and study an online degree and learn about the software mentioned above and then choose the one that is manageable and easy for you to comprehend.