Accounting software for a small business, chosen for the books you will have in two years

Who needs this, and when

You need dedicated accounting software, rather than a spreadsheet, as soon as someone other than you has to rely on the numbers: a lender, an investor, a tax preparer or a buyer of the business. The usual triggers are a first loan or line of credit, a first outside investor, sales tax registration in a second state, a first employee on payroll, or an accountant who asks for read access instead of an export.

At this stage the choice is less about features than about fit with the people around the books. Ask your outside accountant or bookkeeper which products they already support. A product they know costs less to set up and less each month in their time.

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Requirements checklist

Print this checklist to take into a demo.

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If your situation is this, look for that

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What it costs: the components to ask about

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Implementation timeline

1. Week 1: decide the chart of accounts. Agree it with your accountant before you import anything.
2. Week 1 to 2: connect feeds. Bank, card, payments and payroll; check the opening balances against statements.
3. Week 2 to 3: migrate history. Bring in at least the open invoices and bills, plus the year to date if you can.
4. Month 1: run in parallel. Close one month in both systems and compare the statements line by line.
5. Month 2: switch off the old file. Keep a full export of it for your records.

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Questions to ask in a demo

• Show me a bank feed for my bank, and what happens when a transaction is duplicated.
• How does my accountant get access, and what can they change without my approval?
• Show me the audit trail for one edited invoice.
• What is in the export when I cancel, and does it include attachments?
• What does my plan cost after the introductory period, and what is the price if I add two users?
• Which payroll and payments providers connect, and who supports the connection when it breaks?

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Red flags in a contract

• No full export. You need your records for years after you stop using the product: the IRS says to keep records that support a tax return until its period of limitations runs out, and employment tax records for at least four years ¹. If cancelling cuts off access, export everything first.
• Introductory prices with no stated renewal price. Write down the price that applies after the discount.
• Payment fees changed on notice. Check whether the vendor can change payment processing fees without a new agreement.
• No independent controls report on request. If a lender or auditor will rely on the system, ask whether the vendor has a SOC report; the AICPA describes the SOC suite of reports on a service organisation's controls ².
• Automatic renewal of an annual plan with a long notice window. Put the notice date in your calendar on day one.

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The vendors, A to Z

These 7 vendors offer products for this job, going by their own sites. Each is listed in alphabetical order with the same fields, every one taken from the vendor's own pages or from the SEC on the date shown. Inclusion is not a recommendation, and a vendor whose pages we could not read is left out until we can; the method page explains how vendors are included.

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