Bookkeeping software, also known as accounting software, is designed to record, track and process everyday business transactions. Many bookkeeping software programs can process tasks such as billing, payroll, accounts payable, GST filing and financial management reporting with maximum efficiency and accuracy, drastically changing small business operations for the better.
1. Do you need bookkeeping software?
Maintaining full control of your business finances is critical for the success and viability of your small business. It should be the first business application to invest in when starting your business, as you will use it daily to track the money coming in and out of your business.
Bookkeeping or cloud-based accounting software is crucial in helping businesses process their day-to-day activities. Importantly it allows business leaders to keep an eagle eye on their company’s financial health.
You may use your accounting software to produce invoices, track incoming and outgoing payments, discover and follow up on past due accounts receivables, and run reports to monitor your business’s financial health and other factors.
Bookkeeping software allows bookkeepers and accountants alike to handle tasks and functions such as:
- Accounts payable
- Accounts receivable
- Categorisation of transactions
- Financial management
- General ledger
- Preparing key financial statements
- Purchase orders and stock/inventory
- Reconciling bank accounts
- Payroll
- BAS, IAS and other ATO related tasks
- STP (Single Touch Payroll)
- Superannuation
- Stock management
- Job and project management
- Timesheets
- Scheduling
- Client bookings and appointments
2. What software do bookkeepers use?
Bookkeepers are trained and experienced in all types of accounting software. Some have training in specific software, and most have preferences for one or more business software options over others. Ultimately the decision as to what software should be used comes down to the needs of your business.
Over the last fifteen years, accounting software has gone through significant transformation. Up until 2009, almost all accounting software had to be installed on a dedicated computer (or server) to access financial data. The ‘accounts’ computer or server lived in the client’s office and generally required the bookkeeper and other users to work on a dedicated computer within the confines of the company’s physical office. These systems often cost tens of thousands of dollars to buy, install and maintain each year, they also required manual updates. Since 2009, the growth and development of SAAS programs (Software as a Service) has revolutionised how bookkeepers, accountants, and business owners’ access and share their real-time financial data.
The best bookkeepers will have experience across multiple accounting software options. Some industries have particular or unique accounting requirements that pre-determine the suitability of one software over another. If your business has unique software requirements, you may need to shop around for a bookkeeper who has the appropriate skills and experience in the particular software you use. Making a final decision as to which software is the most appropriate will ultimately depend on the business owners’ requirements, the bookkeeper’s skill set and the accountants’ recommendation.
3. What is the best bookkeeping software for a small business?
Many different brands of accounting software are available for small businesses, with varying capabilities and price points. The two common factors that help business owners determine what they require are the type of industry they are in and the number of employees they have. For example, a freelancer would not need the same features in their accounting software as a manufacturer with inventory requirements or a restaurant owner with staff and rostering needs.
Following, we look at the 3 most accessible and cost-effective cloud based accounting systems to suit most small to medium businesses.
Xero
Xero accounting software is a popular bookkeeping software program for bookkeepers and business owners alike. It’s used by millions of business owners, bookkeepers, and accountants to manage the finances of businesses of all sizes.
Known for being highly versatile and easy to navigate, it performs a wide range of critical functions to help maintain records and organise expenses, GST, payroll, and sales. Xero is a product that will suit most small to medium businesses with auto-bank feed functions and STP compliance included. Conveniently, there is also a mobile app that allows you to perform tasks such as invoicing, processing bank transactions, uploading expenses and account management from any smart device, anywhere in the world.
Xero has a clean, attractive interface and fully integrates with a vast number of Add-on apps available to connect via their API to create a multi-faceted complex accounting system. Utilising their App eco partners, Xero can scale as your business grows and is the best choice for handling increasing transactions and complex situations that can come with growth.
Accountants, bookkeepers, and other stakeholders can access their clients’ Xero software, to review and download the information necessary for their role as a real-time, single source of truth.
Unlike some accounting programs that set their pricing based on the number of users, Xero’s subscription plans support unlimited users. As a business grows, you can add new users to your account at no extra cost. All plans include essential features, such as estimates, inventory tracking and recurrent invoicing. The software can also connect to more than 700 app integrations, and it comes with 24/7 email, live chat and general support assistance.
Xero has different plans for each stage of a business’ growth from sole trader and small companies up to medium sized enterprises. The costs start from $29 per month for small, start-ups, through to their premium plans that cater for multi-currency, auto-super and payroll for up to 100 staff. They also have a $10 per month Payroll-only plan for up to 4 staff. All Xero plans are flexible, you can seamlessly upgrade or downgrade your plan, depending on the changing needs of your business. Xero is a web browser-based software so there’s nothing to install, all updates are managed by Xero and you can access all the features across any internet-connected device, whether it’s Apple, Android or Windows.
MYOB
MYOB has a number of software option suitable for a range of business sizes and requirements. Their micro-small business products, MYOB Business Lite and Business Pro are suitable for businesses needing standard accounting features like BAS, P&L, Balance Sheet, Bank reconciliation, Payables and Client invoicing. There is one big negative to the MYOB Business Lite and Business Pro products, you cannot move between these software products and the more sophisticated MYOB AccountRight Live options. Should your business outgrow Business Lite or Business Pro you will need to move to a completely new product (such as MYOB AccountRight) and start again.
MYOB Business Lite and Business Pro start from $28 per month with the option of adding payroll at $1.50/employee per month.
The next step up in the MYOB product range is MYOB AccountRight Live and AccountRight Premier. Both allow small business owners to track income, expenses, creditors, debtors, purchases, inventory, jobs, time billing jobs, and payroll. MYOB AccountRight options have a straightforward interface that makes it easy to manage everything simultaneously. The difference between the two is that AccountRight Premier offers the addition of multi-currency management.
Both MYOB AccountRight Live and AccountRight Premier integrate with 350 add-on app options. While MYOB has long been considered a great accounting software by Australian small businesses, a major drawback with the MYOB AccountRight products is that they are specifically designed for Windows operating systems. MYOB recommend that Apple Mac users consider using MYOB Business Lite or Business Pro, as they run in your web browser. This is a significant limitation as you can’t access your financial data on Apple devices.
The cost of AccountRight Plus is $130 per month, with AccountRight Premier being $160 per month.
The big MYOB hitter is MYOB Advance, which is a customisable, cloud ERP software suitable for large enterprises. Advanced can manage financial, customers, projects and reporting with the advantage of automating manual processes to improve your business efficiencies. As this is a web-based product, access to critical information is available on any device.
QuickBooks Online
QuickBooks (QBO) is another popular small business accounting software choice. Like Xero and MYOB, the advantages of using QBO over desktop-based software is:
- Scalable
- Commonly used by accountants and bookkeepers
- Integration with third-party applications
- Cloud-based
- Mobile app
QuickBooks helps you to track and organise your business expenses by pulling information such as; date, vendor, amount, GST, and payment method from your receipts. The receipt is then automatically categorised and matched to an expense. QuickBooks maintains, records and organises expenses GST and sales with all information viewable on a customisable dashboard or through the many accounting and bookkeeping reports that can be generated within the system.
It also integrates seamlessly with a wide variety of platforms and apps such as PayPal and Square.
Other bookkeeping software applications to consider:
If Xero, MYOB or Intuit QBO do not have all the features you need, there are a variety of business apps available on the market to “Add-on” to these systems to create your own custom software. They can help create more time and efficiencies, for the well-being of your business.
- For automating accounts payable and expenses: Dext, Hubdoc, AutoEntry, Expensify
- For HR and payroll: Employment Hero, Deputy, Tanda, Deel
- For Inventory: Dear, Unleashed, Netsuite
- For invoicing: FreshBooks, Harvest, Leap
- For jobs and project management: WorkFlowMax, Monday, Trello
- For construction and trades: Tradify, ServiceM8, Simpro
- For microbusinesses: Zoho Books
- For automated and ecommerce payments: Stripe, GoCardless, Square, Payrix
- For management reporting: SYFT, Fathom, Spotlight, Calxa
- For eCommerce: A2X, Shopify, Neto
- For automated debt collection: ezyCollect, Debtor Daddy, Chaser
- For international and multi-currency transactions: Airwallex, Wise
For larger enterprises, with complex accounting requirements that require even more custom solutions and ERP (Enterprise Resource Planning) there are products such as Netsuite, SAP and Sage which deliver highly sophisticated, all-in-one solutions. These larger enterprise systems need specialist implementation and a bookkeeper experienced in the software to manage ongoing work.
Keeping a tight grip on your finances is critical for your business’ viability. By investing in the right bookkeeping software early on and knowing when to make the switch, you’ll be well on your way to achieving optimal business growth and success.
Get in touch today to learn more about the best accounting software program for your business or click here for some helpful resources.