One of the key software that every small business owner should consider buying is an accounting software. Not only does it decrease cost and time in preparing financial information, it can also be used by businesses to instantly generate reports for decision making.

Choosing an accounting software is an important decision for small businesses since choosing the wrong one would mean losing a substantial amount of money, and losing productive time and other business opportunities due to time spent learning and implementing the system. Here are some guidelines to follow when evaluating different accounting software packages in the market:

1. Cost

Most accounting software can be had for a one-time fee while some charge recurring yearly or monthly payments. There are free accounting software but these packages usually lack support and various updates that paid programs provide. Similarly, open source accounting software, like any other open source programs, must be programmed to fit the specific needs of a business; which translates to hiring computer programmers or specialists to modify the program and in some cases, maintain it for the company.

Remember that you shouldn't base your purchasing decision on cost alone. We all want to get the most value out of our money but this doesn't necessarily mean that the cheapest software will give you more value. It might make sense to pay a premium for an accounting software that better suits your needs.

2. Ease of Use

An easy to use system is ideal for small business owners since every bit of time spent on accounting is time that could have been spent running or growing the business.

Simpler systems will most likely have a low learning curve associated with them, and the faster you learn how to use a software package, the faster you gain the benefits from using it. Complicated systems are also prone to user mistakes and if they're not corrected, any reports and documents generated from it would not be accurate.

A simple single-entry system (as opposed to double-entry or full general ledger) will suffice for the vast majority of small businesses. This will allow you to do your bookkeeping in-house and hire a CPA or accounting firm to produce your end of year financial statements.

3. Other Features and Reporting Capabilities

Depending on your needs, advanced features and reporting capabilities can save you countless hours. Some accounting software may offer advance features such as automatic payroll calculations, invoicing and stock management features. Reports produced by the system allow you to quickly assess your accounts and give you financial insights into your business to help you in decision making.

These features maybe bundled in, sold as an upgrade or provided as add-on modules to the original system. A modularized system is ideal for businesses that doesn't need a particular feature now, but may do so as their company grows. Having all available features may seem nice but these things will most likely cost more. You must determine your needs before hand so that you don't end up paying for features or add-ons that you won't use.

4. Support and Program Updates

Computer and software error can happen when you least expect it so it's a good thing to know that you can contact someone to resolve your issue. Personal and timely support provided by people skilled in the particular software package can be invaluable and save time, money and stress. Ideally support offered will be more than simply knowledge-base and email. Knowing you can pick up the phone and talk to someone can be important. Some companies even provides webinars and in-person training sessions to help you master their software.

Program updates are important to fix unforeseen bugs, provide software improvements and even new features to the software. Updates are also released whenever there's a change in accounting law (most specially the tax rate). Support and updates are generally considered as a premium service by the industry. Most companies usually offer per-year or per-month subscriptions to support and update programs while others may also utilize a pay-as-you go model.

Conclusion

As you embark on your search for the right accounting software, remember to spend some time to determine your business needs. Take advantage of the various 'free trial' offers. Ask questions of the software provider, get a feel for the extent of their support. This will allow you to effectively evaluate different software first hand before you commit your business' money and time to a particular product.