The Accounting & Bookkeeping Software Your Small Business Needs in 2020

Updated: May 22, 2020

series map

>>> One: Accounting / Bookkeeping

>>> Guide: The Accounting & Bookkeeping Software You Need [YOU ARE HERE]

>>> Deep Dive: The Top 3 Accounting & Bookkeeping Systems

>>> How-To: Setup Your Accounting & Bookkeeping Software [coming soon]

>>> Two: Invoicing / Billing / Point of Sale

>>> Three: Workload Management

>>> Four: Customer Management [coming soon]

>>> Five: Domain Name / Website / Social Media [coming soon]

When you Google "best bookkeeping software for small businesses" or "why do you need accounting software," you're bombarded with a slurry of pages with endless lists that compare features and try to convince you why you need to use their software. They'll tell you you'll save time with easier data entry. They'll say your business will be simpler because you can access data quicker. But they will be wrong - because they're missing the bigger point.

They fail to ask why do you even need this software?

Let's start with a simple question.

What does accounting and bookkeeping software actually do?

Common systems vary in what their offerings, but basics are all the same. An accounting system will help you track the money coming into your business and the money going out of your business. Everything from customer invoices, retail transactions, cost of goods sold, travel expenses - it all gets tracked from a financial perspective by the bookkeeping software.

Want to know what system is right for you? Check out our Accounting & Bookkeeping Deep Dive!

So why does that matter?

The old idiom does not lie: cash is king. No matter what kind of business you're in, even if you don't think you need it, every company must keep a handle on how much cash they have in the bank.

More than that, you need to know how much working capital you have. An accounting dictionary may define this differently, but think of working capital as the actual amount of cash you have to work with.

Unlike personal transactions - which in today's day and age are almost entirely processed nearly instantaneously - the exchange of money in the business world far more often occurs on a much more delayed schedule. You have money due to you that you may not see for 30, 60, even 90 days.

You need to track that money. You can't assume you will just get paid. The accounting software will help you understand how much money you have on hand, how much money you're owed, and how much money you owe other people. This is useful because if you spend more than you have in working capital, it will be hard to pay all the bills when your vendors come knocking.

You can think of every aspect of business financials as having some interesting twist when compared to personal finances. Everything gets complicated and no one but accountants really want to deal with that.

I'm not here to give you an economics lesson on how to run your business. I'm here to tell you to let software handle it for you.

There's a lot of smart people who have already tackled this problem. You just need to know how to take advantage of the systems they've built. Instead of manually keeping track of all your financial transactions, let's let software do that instead.

Who needs accounting & bookkeeping systems?

Honestly, everyone. No matter how big or small, money is the most important. Very few people get into business without some need to pay bills, taxes, you name it. And if you don't have a good handle on your money, you will never be able to successfully manage all your expenses.

All business owners must have some system to track their financials. If you're just starting out, that system could be as simple as a spreadsheet where you input revenue and expenses each week. While it's painful to maintain and not shareable or scalable, this works if you're early on.

However, as soon as you start to grow at all, you will quickly see the benefits of setting up an accounting system. You can connect bank accounts and credit cards to automatically track and categorize expenses and report taxes. As you begin to hire, you can automatically add payroll and time management modules as well. A process that formerly lived in multiple spreadsheets on a single machine can now be accessed by employees remotely to more efficiently maintain the business financials.

Confused? Questions? Just ask!

Want to know what system is right for you? Check out our Accounting & Bookkeeping Deep Dive. Ready to move on to step 2? Check out our next software guide: Invoicing / Billing / Point of Sale.

nerd out,