Before you finalise an accountant and an accounting system please go through these 18 Factors to consider before deciding on an accounting system: a comprehensive guide for 2023, we have also included a checklist for your convenience.

One of the questions that every new start-ups or a business has is “what type of accounting systems to use to manage and control their finances?”.

This should cover both retaining documents and the recording of transactions on a legacy accounting system or on a cloud based accounting system.

A wide variety of accounting software is designed specifically for use in organisations of all scale and size. At first, it seems as though all of these different packages offer the same features and functionality but they vary considerably with their value propositions. So, how do you go about deciding which accounting application will serve your company’s needs the very best?

Do not make a hasty decision and buy the first piece of accounting system you come across that has a brand name you are familiar with. We have curated a comprehensive list of factors that you need to consider when searching for accounting software suitable for your business.

Stress about cloud accounting?

Here are the 18 factors to consider before decide on the move to a accounting application.

  • Evaluate Business Needs
  • Understand Compliance Needs
  • Feature List Requirement
  • Industry Specific Solution
  • Multicurrency Capabilities
  • Type of Accounting System
  • Data Accessibility
  • Third Party Integration
  • Compatibility With Banks
  • System Scalability
  • Role Based User Management
  • Data Security & Backup
  • Application Pricing
  • Ease Of Use
  • Customer Support
  • Financial Reporting
  • Ask Your Accountant
  • Understand Workflow

Account Software Selection Checklist


1. Understand your financial needs whether it’s a start-up, a small business or a multinational corporation.

Firstly you need to consider the type and scale of your business. For instance a simple Income and Expenditure account is acceptable for a small self-employment but a full set of accounts is required for a company. Non-Profits require a very transparent system of controls and segregation of duties which wouldn’t be required in a small private business. Retail and Hospitality businesses have to manage cash transactions and generally produce a lot more paperwork than say a similar sized consultancy business. Volume of transactions will be one of the most important considerations


2. Understand Legal and Statutory Requirements that are required by the governing bodies in your operating jurisdictions.

Companies are required by law to maintain proper books and records although all entities should do. All organisations are required to hold on to relevant documents for 6 years. Solicitors or any business holding client monies have stringent accounting rules to follow. Financial services and auctioneers are also regulated by statute. Revenue have their own rules for anyone registered for taxes and the CRO require companies to file annually. Construction businesses must comply with RCT rules.


3. List down all the general functions and features that you think you need in your business operations.

Start your search by making a list of the most important features you’ll need. Do you need to raise purchase orders? Will you keep raw materials, parts, or finished goods in stock? Simple accounting records can be kept with any good accounting system. But they can be very different in how they work in other ways. When choosing software, look for one that meets your list. This may imply selecting one software over another based on the features it provides.

Here are some of the features that you may need in an accounting software for your business.

  • Ability to send invoices to customers
  • Recurring invoices & billing.
  • Payment reminders on open invoices
  • Multi Currency functionality
  • Bank reconciliation
  • Reports and payments for vendors
  • Ability to monitor expenses & revenue
  • Bank deposits & withdrawals tracking
  • Bank transactions tracking
  • Credit card transactions & payments
  • Multiple user management.

When evaluating features, you should also consider the ones you’ll require as your business expands. The last thing you want is to be stuck with software that no longer meets your needs as your business grows.

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4. Conduct an analysis of the industry-specific functionality that you require from your accounting system.

Certain industries and sectors have specific requirements. For example, A sole trader or a small business may require project costing to monitor the profitability of projects. A business that engages in eCommerce or One Stop Shop (OSS) may require accounting application that is compatible with eCommerce store. Therefore, do not limit your search to only the well-known, general accounting or cloud accounting apps. Additionally, it will be beneficial to search for industry-specific packages.


5. Ask yourself do you require Multicurrency Capabilities in your accounting software.

The digital age has reduced the distance between consumers and companies. Today, even small businesses serve international clients. If you quite often receive transactions in different currencies, you will require multicurrency capabilities. This will enable you to update transactions in both the foreign currency and your native currency. If you have assets and liabilities in various currencies, you must also be able to conduct currency revaluations. Foreign currency functionality is frequently absent from standard accounting systems for small businesses. Consequently, if you utilise multiple currencies, ensure that the software you purchase supports multiple currencies.


6. Consider your alternatives, choose either between traditional desktop accounting systems or cloud accounting systems.

Start-ups and new business owners prefer to use Cloud-based accounting software. They prefer to access their company’s financial data remotely and send client invoices via email from anywhere. Cloud-based accounting software provides anywhere-access to their accounting system. It also enables them to collaborate with their employees or accountants to expedite processes. The disadvantage of cloud-based software is that it requires Internet connectivity. Without Internet access, you cannot access your accounts. This is something to consider if your Internet connection is unreliable but having access to the most recent financial data and reports at any time and from any location will allow you to make prompt decisions.

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7. Once you have decided between cloud or desktop consider the accessibility of your data from these applications.

As an accountant and advisor to a busy business owner, you require software that is adaptable and easily accessible at any time, from any location. Ask yourself questions to assess the usability of the accounting software. Is the application accessible while on the go? From multiple platforms? By multiple users?

Consider the following when selecting software to determine its accessibility:

  • If the application is cloud-based or desktop-based, can you access the data remotely.
  • Can you access the application through various devices (e.g., phone, tablet)
  • Does the application have a mobile app or responsive design
  • How simple it is for your clients to gain access


8. Consider selecting an accounting application that can seamlessly integrate with other third party business softwares.

If you want to upgrade to the most recent accounting software, you should be cautious about what you choose. Choose software that will work seamlessly with your existing business software suite. Choosing accounting software without considering the serious implications of your decision can be detrimental to your business and may disrupt its smooth operation.

Furthermore, you may purchase additional applications in the future to improve the efficiency of your business. Purchasing or subscribing to an application that is adaptable and scalable will make makes sense in a long run.


9. Is the accounting application compatible with your banks and can it integrate and reconcile with your business’s account.

Many of the biggest accounting applications support bank integration. This integration will enable you to download bank transactions. You will then be able to finish your bank reconciliations. This method of automating bank reconciliations will save you a great deal of time. However, for this to be possible, your accounting system must be compatible with your bank’s software.

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10. Can the accounting system scale with your growing and demanding business requirements.

If you expect your business to expand, you will need a scalable accounting system. Transaction volume will increase as a result of a business’s expansion. In addition, it will necessitate a multi-user accounting system. Higher transaction volumes may also justify the use of additional software features. Therefore, it is a good idea to determine what upgrades your business will require to accommodate its future growth. In addition, you should determine how much these upgrades will cost.


11. Consider if you need a role based user security settings in your accounting application.

If you anticipate significant business expansion, you will need to consider user security. You must be able to specify what each user can view and perform on your accounting system. This security goes far beyond simple read and write protections. When multiple people are using the software, you must also implement role-based security.


12. Consider the data security and privacy of your business data and financial records and where it will be securely saved.

Cloud based accounting applications are the new trends, you should wisely invest your money into a new age system instead of desktop-based ones as desktop applications are becoming obsolete and outdated.

With cloud accounting applications, your business’s vital financial information is stored on highly secured dedicated managed servers with multiple redundancies. Your data is safe and there is no physical danger there from your end. You set when the data is backed up and make sure that the frequency fits your needs.

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13. Consider how much you are willing to invest and what’s your monthly budget

One thing that most small business owners have always thought about when buying accounting software is how much it costs. The fact is Cloud-based accounting software, doesn’t cost very much. It usually costs a small amount each month to use. The price you pay will vary based on factors such as functionality and user count. Some package prices are also based upon the number of transactions are made. Think about what you need now and what you will require in the future. You can switch accounting system if you outgrow it. But upgrading a system is usually much easier and cheaper than replacing it.


14. Consider the end-user, in mind a user-friendly application will make it easier to manage your finances.

When buying an accounting system, the ease of use is the most important factor to think about. Most applications are easy to use and gives you a dashboard with charts that show how your business is doing financially. It is very helpful to be able to see in one place how much money came in or went out of the company, as well as invoices owed to the company or bills that the company needs to pay, and all user activities.

The software should make it easier to keep your books and do your accounting, however If it becomes a little difficult to manage the you may look at taking on an administrator that can do other things for you also or outsource the job to an external bookkeeper. Alternatively you could outsource some or all of the activities to an accounting firm to provide a professional overview to your finance function.


15. Consider doing research on how the after-sales customer support is for the application.

Customer support is one of the most important aspects when it comes to selecting an accounting application for your business. When you first set up a new accounting system, you will require training and assistance and once you are live and active you will require ongoing support. Check the type of available support and training, as well as the availability of support. If you typically update your accounts on the weekends, a weekday support will be useless to you.

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16. Check what kind of reports are available with the system.

Reporting is one of the most important components of accounting applications. Determine how simple it is to access, print, and share the reports. You may also want to determine whether or not they offer comparative or granular reporting.

Here are some reports you might require:

  • Profit and loss statement.
  • Balance sheet.
  • Aged receivables and payables.
  • Trial Balance.
  • General ledger
  • Payments and Invoices report.
  • Profitability etc.


17. Your accountant understands your business financial needs, ask what they recommend.

Ask your accountant if they have any software that they would recommend. Your accountant might be able to assist you with setting up and using the software you’re using if they are familiar with it. Your accountant will have an easier time locating the data they require from your accounts due to familiarity.


18. Simple Steps to Best Practice

  • Prepare a budget or simple cashflow forecast for your business, this gives you a plan and a good indication of the following requirements
  • Decide how you will invoice your customer or otherwise record transactions, this may range from simple spreadsheets to say, a cloud based accounting system, like Xero
  • Use scanning software, like Hubdoc, to capture your purchase invoices and receipts electronically. Alernatively a simple process of filing paper documents in folders and referencing them to the accounting system
  • Write up simple procedures to capture what tasks have to be completed, by whom and by what date e.g. invoicing, chasing payments, paying wages etc.
  • Implement and monitor actual results against your budget


Like most things it comes down to your specific requirements and what works best for your circumstances. Most people can manage simple spreadsheets now and in many cases that may be sufficient. A simple method of retaining and filing documents is crucial to a working process. The much maligned ‘shoebox of receipts’ is much preferable to no system at all. You should seek counsel from people you trust and get professional advice. Finally main takeaway from this article is that you should not rush into purchasing accounting software. Despite having a similar appearance, systems like QuickBooks, Xero, and Sage do not all function in the same way. If you purchase the wrong accounting software, you will have wasted more than just your money. Additionally, a significant amount of your own time will have been wasted. Furthermore, one of the most valuable and limited resources you have as a small business owner is your time.

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Account Software Selection Checklist

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18 Factors To Consider Before Deciding On An Accounting System: 2023 Comprehensive Guide & Checklist. 2

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