The evolution of bookkeeping over time has peaked in this present age of technology. The existence of a virtual marketplace run by software has reduced buyer-seller contact and nearly made the ancient bookkeeping method of pen and paper inefficient.
Sole proprietors or small business owners must bridge this evolving accounting divide with their software. Every business needs one. The best accounting software for small businesses and how to select the most suitable for yourself are discussed in this article.
Overview of Accounting Software
Accounting software is a fast, automated, and reliable app that manages the user business’ accounting data. There are many variations suited to meet the needs of every small or big business, even those for sole proprietors.
Accounting software usage beats spreadsheets in ways including data accuracy, syncing financial data, instant report generation, provision of detailed insights, and professional-looking financial statements, among others.
Accounting software, as earlier said, varies – by function and design. However, there is versatility in most, as accounting software can operate on your phone without finding a laptop to access your business finance information.
Key Features of an Accounting Software
- Records all financial transactions
- Automatic updates and scalability
- Error identification and report
- Billing and, invoice & payment processing
- Analysis and report
- Accounts payable
- Mobile usage
Accounting software must be first easily useable. It must be user-friendly and intuitive enough for your personal use as a sole proprietor, even without prior accounting knowledge. Finally, it should be adaptable and functional.
Records All Financial Transactions/ General Ledger
Your accounting software must have basic accounting features such as a general ledger, chart of accounts, invoicing, account reconciliation, account receivable (AR), account payable (AP), payment records, and financial reporting.
It should also be able to deal with online sales tax legislations and calculations, third-party vendors’ details, including bank accounts, invoices, payment modes, possible advance payment, and others.
Automatic Updates and Scalability
An accounting software system must be upgradable to keep up with the latest accounting technologies. This feature is useful in maintaining a smooth, hitch-free account. The accounting software, in terms of scalability, must allow the business owner’s growth. A sole proprietor could decide to expand by employing others, and the selected accounting software must be able to accommodate an increased user base and more transactions.
Error Identification and Report
A good accounting software solution must be transparent and accurate that is error-free. Furthermore, it must ensure easy work through proper computation, storage, and error removal. This process hence ensures an easily comprehendible financial development.
Billing and Invoice & Payment Processing
A decent accounting software solution can facilitate invoicing and payment. It can analyze the amount due to you, the seller, and the buyer. In addition, accounting software enables you, as a sole proprietor, to print invoices and email them.
The software captures basic client data such as name, address (and email address), account number, and any other detail needed for that transaction.
Analysis and Report
These are qualities of good accounting software. In addition, the financial data from transactions are recorded, analyzed, and built into a usable and organized report that the sole proprietor can use for business needs requiring them. This feature is essential in tracking and monitoring the business’ growth in real-time.
This feature is a part of the general ledger, which withholds vendor information and management of business outflow transactions and debts. This key feature of the accounting software sub-features three factors: Purchase orders that track all quoted orders requiring processing, automatic payments that manage all scheduled payments, drafts, and associated details & credit memos that record and track all credit issues showing the financial data imbalance.
The mobility of accounting software is a norm. Businesses, small or big these days, are not confined to a building; rather, they are carried around easily as a phone – Android and iOS alike or laptop apps to suit the user’s need without a deficit in function.
The vitality of business transactions cannot be trifled with. Therefore, the security of these crucial business data is of utmost importance. Hence, the business dealings of every business using accounting software are treated with secrecy using software techniques like passwords, biometrics, and encryption for data protection and security.
How to select the best accounting software for your business as a sole proprietor
Getting the most out of any accounting software will require it to be able to perform all the tasks your small business needs. For example, a small business owner that sells products would, for optimal accounting function, need an inventory management feature in the selected accounting software.
- Ease of use
- Available features.
The cost of accounting software is probably the most important option to consider. A good choice of accounting software should be that which is budget friendly or free if it works for you. However, it must be weighed if the features needed are in a more expensive accounting software solution package – if you need to pay for support and the like or if it is included in the package cost.
Ease of Use
The ease of use of accounting software is quite subjective. Two proprietors running the same business might find the same software in different interests. To determine the best fit for you, download the demos of accounting solutions that interest you and give them a test drive.
Certain features are a must for all accounting software solutions, such as double entry accounting capability, a good support system, and easy invoicing. Other features to be considered are based on the sole proprietor’s needs in the software solution.
Best Accounting Software Available for Sole Proprietors
So far, you are informed about the dire need for accounting software for your small business as a sole proprietor and, what to expect and look for in one & things to consider while choosing to suit your business’s specific needs as much as possible.
There are many accounting software available, and deciding which one is a very big decision every sole proprietor has to make. Most accounting software are designed to suit specific businesses and many are similar; the downside to most are their plan prices. It is a big decision to choose because it is usually difficult to switch to a different accounting software after already choosing one.
Best accounting software for remote accounting access
One of the most widely used paid accounting software. Professionals highly recommend it for your small business. It has countless online training resources and forums for your learning. In addition, it has one main dashboard for accessing all the accounting features you would need to conveniently and efficiently run your accounting operations.
Quickbooks Online is scalable, cloud-based, and integrated as a mobile app for your phone. Another good feature of the software is its ability to integrate with third-party applications you use for your business needs as a sole proprietor.
QuickBooks Online gives you the freedom to activate as many features as you would need. The features accessible to you are dependent on the app package you subscribed to. The software costs are at a 50% discount for your first three months before returning to the norm.
QuickBooks Online plans are as follows:
- Simple Start plan – useable to you and your accountant for $8.50 in the first three months, then $17.00 afterward, offering customer invoicing, payment acceptance, customer estimates, and sales tax (VAT) tracking.
- Essentials plan – useable to three persons and your accountant for $13.00 in the first three months, then $26.00 subsequently offering, in addition to the Simple Start plan, multi- currency operation, insights and report, and employee management.
- Plus plan – useable to five persons and your accountant for $18.00 in the first three months, then $36.00 subsequently offering, in addition to the Essentials plan, budget management, inventory tracking, project & location tracking, and recurring transactions.
Best scalable Accounting software
FreshBooks is very good for small business owners, especially sole proprietors, as it does not offer a payroll feature. It is excellent to easily keep track of your expenses, client bills, and bank account. It offers four subscription plans that allow your scalability as a business owner.
FreshBooks has many features expected of very good accounting software, including customizable invoices, bank connectivity, time tracking, in-app estimates, project management, payment management, live support options, and app integration capability with over a hundred apps.
This accounting software’s subscription plans are grouped based on the number of billable clients. FreshBooks’ plans are as follows:
- Lite plan – up to 5 billable clients at $15.00 a month
- Plus plan – up to 50 billable clients at $25.00 a month
- Premium plan – unlimited billable clients at $50.00 a month
- Select plan – unlimited billable clients with special features at a custom pricing
Best accounting software for niche sellers
Xero is also a very good option for sole proprietors with small businesses. In addition, it is recommended for niche markets and online sellers selling even globally.
Xero offers numerous features, including custom invoicing, expense and inventory management, contacts, bank connectivity, budget making, mobile usage, and a multi-currency supporting bill payment feature. It also offers third-party app integration with over 700 apps in various categories.
The features available to you are dependent on your subscription plan.
Xero accounting software also offers an optional payroll feature powered by Gusto from $40 per month with a $6 increase per head.
The available plans on Xero are as follows:
- Early plan – $12 per month but for 20 invoices and five bills.
- Growing plan – $34 per month
- Established plan – $65 per month
Best free accounting software
Wave Accounting software is the dream software of sole proprietors and other small business owners. It is free accounting software with cheap additional features like payment and payroll, which is no issue for a sole proprietor. All base features are accessible upon sign-up.
Features found in Wave Accounting software are double-entry accounting, bank connectivity, mobile usage, bill payment management, recurring invoice processing, custom invoice creation, and customer estimates. In addition, new Wave users receive chat support for 60 days, then email support only afterward.
Wave payment subscription is the same cost as any other vendor – 2.9% and a thirty cents ($0.30) transaction fee, while ACH payments are 1% of the amount processed. Payroll subscription is charged at $35 in tax service US states and $20 in self-service US states with a $6 increase per active employee and the independent contractor paid.
Best accounting software for a growing business
Sage Business Cloud Accounting, formerly known as Sage One, is another very good accounting software for sole proprietors. In addition, it is an excellent accounting software choice for sellers of products and services.
Sage Business Cloud Accounting manages and keeps track of both stock and non-stock inventory or informs your consumers or customers of the services currently being rendered by your business. In addition, the app time tracks, connect your bank, manage sales tax (VAT) for products & services and can accept online payments and pay vendor bills electronically.
This accounting software offers two plans –
- Sage Accounting. Offers limited features such as quotes and estimates sending, cash flow forecast, purchase invoice management and snap receipt auto-entry – all for $20.00 monthly.
- Start and Sage Accounting. Priced at $10.00 a month, it is limited to one user but features bank connectivity, invoice generation & sending, and debt tracking.
An additional benefit of Sage Business Cloud Accounting is the access to the Sage Marketplace, which connects various apps from many categories to you.
What to do to get the Most of the Selected Accounting Software for Your Business
While accounting software, as extensively discussed, makes a huge difference in your business’s bookkeeping, it all dials down to the sole proprietor’s diligence in continually feeding the data needed for an accurate business account. This diligence also affects the business presence of accounting software that plays a role or two in selling products and services.
No matter the business type, good accounting software will most definitely ease your responsibilities as a sole proprietor running a small business.