The cost of accounting software varies greatly, so it's important to find a system that's within your budget. However, it's not as simple as identifying the price of the software package, as there are other considerations to think about, such as what else you get for your money.
Some accounting software systems offer comprehensive technical support, so there's always someone you can contact by phone or email when you run into problems. In contrast, some accounting packages offer very little in the way of support, so once you've paid for the software, you're on your own.
The hardware required to run your accounting software system is going to affect costs, too. Servers, storage, and the number of PCs you're going to need licenses for all have to be taken into account. Of course, these days, a convenient solution is to use a cloud-based accounting service, where all software and data is stored on the Internet. This means that you don't have to worry about storage and backup. However, cloud-based systems also have their drawbacks.
Because modern accounting software platforms handle all sorts of data, such as employee payroll information and customer credit card details, security has to be taken seriously. One of the biggest problems with cloud-based systems is that you're handing all this information over to a third party. The perception is that the data is less secure than on a standalone system stored on your company's own servers. But the facts might surprise you. The reality is that cloud-based accounting systems are often more secure than the software that runs on a company's own computers, servers, or intranet. Cloud hosting usually includes redundant backups and co-located servers to ensure that no data can ever be accidentally lost or destroyed. In addition, they offer access control systems that can force users to change passwords, can limit user access to sensitive data, and can track every action so that no information can be altered without leaving a trail. This makes it easier to audit systems and correct errors.
For very small businesses, such as sole proprietors, it might be the case that you don't need to purchase accounting software. If you just require a basic system to keep track of money coming in and out, spreadsheet programs such as those packaged with Microsoft Office or Google Docs can take care of the basics for you. But if you want the security of having the software calculate your payroll and taxes, or the convenience of paying taxes and other bills electronically, you'll appreciate the new breed of low-cost accounting solutions. Excellent packages start as low as $9 per month.
Glossary of Terms
Sometimes we find it important to understand the terminology when talking to vendors. Here's a glossary to help with this process.
Accounts Payable (A/P): Amount you owe for services or products purchased from vendors. A/P is a liability on the company's books.
Accounts Receivable (A/R): Amount a business is owed from customers for goods or services sold. A/R is an asset on a company's books.
Cloud: Cloud computing is the hosting of software on the Internet. You use the software by accessing it online. Cloud computing, also called "software-as-a-service," or SaaS, saves companies money by eliminating the need to purchase software and servers, and ensures more reliable software upgrades and usually better security.
Contractor: Somebody working for a company who is not a direct employee.
Drop shipment: When goods are sent directly to a customer from a third party, such as a manufacturer or wholesaler, rather than the retailer who sold the goods.
Internal Revenue Service (IRS): A division of the U.S. Treasury Department that administers the collection of taxes.
Payroll: The money a business pays to its employees for work performed.