How to choose the right accounting package for your business
Every business is different and while most have very similar needs when it comes to the accounting function, it is well worth taking care when you select a system for your business.
There are a number of issues that you need to consider when making your choice, but the first step is to define your basic overall needs. Some of the major considerations you’ll want to take into account are as follows...
- Are you a limited company or sole trader? The former will need a system that has the full sales, purchase and nominal ledgers. If you work alone or just as a small partnership, a much more basic system may do.
- Do you need payroll? If you do, you will need this to be available as an integrated function of the package.
- What's your monthly volume of transactions? The number of sales and purchases you transact may be important – the package will need to be able to cope. If you can count the number of transactions you do on two hands, you might be better off just keeping books manually.
- How many users will you have? In most small businesses, it is only one, but if you need more people keying in data or needing access to the records, you’ll need a proper multi-user accounting system.
- What will the software run on? Is it a lone PC or a network?
Those are just the basics though and there is a whole swathe of questions that you need to ask yourself about your more detailed, accounting related needs as well.
- Do you need cash accounting? If you do, it is worth checking the software can cope.
- Are you in retail If you run a shop you may need point-of-sale functionality and the ability to deal with many different types of payments and voucher schemes.
- VAT Do you need to calculate it and what types of VAT system do you use? If you use flat rate, retail or another scheme, can the software cope?
- Payroll If you need this, what requirements do you have for PAYE and NI calculations?
- Management information and reports What do you need to produce and how often? Is it easy to do this with the software?
- Invoicing Do you have any special needs? How do you want invoices to look and do you want to send them electronically? If you want to use paper-based invoices, will you need special stationery and where will this come from?
- Electronic payments More businesses are using this form of payment now – do you need to be able to receive and record payments and make them as well?
- Credit control What functions do you need with regards to managing credit limits and producing statements and aged debtor information?
- Foreign currency Do you need to deal in euros, US dollars or some other currency?
- Compatibility Do you need the package to work with spreadsheets or other desktop applications? Will you need to exchange data with your accountants?
- Stock control Do you need to keep track of physical stocks and their asset values?
- Legal and industry requirements What are the needs of your business and does the package enable you to meet them? Limited companies need to produce annual audited accounts.
Using these criteria, you should be able to narrow down your choice to a short-list. At this stage it is important to consider, not only the functionality of the product, but how it will be supported and maintained.
If you are a very small business or sole trader you may be happy to make your own decision - based on the needs you’ve defined – from the web or a retail outlet. Many small businesses though, will seek out their local reseller who is likely to have a lot of experience in helping small companies to select and set-up accounting systems. Alternatively, your own accountant may be able to offer help and advice.
It is important to consider the ‘what if’ factors at this stage – if you run a payroll and it goes wrong just as the wages are being calculated, that may cause you some problems. You will also have regular set deadlines for VAT and tax returns and these must always be met. Having a good backup regime and an expert on-hand who can help, may be very important to the long-term stability of your accounts system and your business.
Some software companies offer annual maintenance software updates and also telephone support for a fee – but remember this will normally be only telephone support rather than an on-site service – local resellers are more likely to provide the ‘hand-holding’ type of support.
Other aspects of setting up and running the system you might want to talk about to your supplier are:
- Installation Who does it and how? Will you need specialist help or your accountant on hand? It is important to get the initial company set-up just right so that the right Chart of Accounts, i.e. the types of documents and what they are called – is used and the correct company details and information is used for areas such as VAT.
- Parallel running Do you plan to run your old system of accounting alongside the new one for a while? It is often a good idea, just in case things go wrong or you have to start again. It is also a good idea to avoid setting up just before critical deadlines – such as a year-end, or the end of the VAT quarter, or just ahead of a payroll run.
- Training Will staff need to be shown how toget the best from the software?
- Support and maintenance What happens when things go wrong? Who can you call and who will come along to sort out any serious issues?