Now that you're familiar with what accounting software is and why you should use it, it's important to know which tools and features to look for when choosing a system.
1. Accounts receivableAccounting software systems need to have the ability to handle billing, keeping track of what customers owe (accounts receivable, or A/R) and their obligations. Here are some of the chief A/R qualities to look for.
At the minimum, accounting software should be able to handle invoicing. All accounting systems allow you to print bills, with most letting you email them. Your system should recall basic customer data, such as names, addresses, account numbers and regular terms. Nearly all of today's software systems also remember your normal pricing for a wide variety of services and products.Automated invoicingThis ensures earnings is never delayed because you have forgotten to send out an invoice. Additionally, with automated statements and overdue reminders, the accounting software acts as your collection department, allowing customers to pay their bills.
Payment processingMany accounting methods allow your customers to pay their bills online by clicking a button on the electronic bill you ship them. The benefits for the vendor are many, including less staff time devoted to calculating checks or earning bank deposits, higher safety for payments, and faster processing times. But, there are costs involved. Expect to pay rates like those of credit card processing companies to have your accounting system manage debit card and credit card payments.
Some systems allow ACH payments to be directly deposited to your checking account, and there is nothing like payments pouring into your checking account automatically every month minus you waiting for checks in the email or running to the lender. Although there's frequently a fee for this too, it is usually less costly than accepting card payments.
2. Accounts payableNobody enjoys paying bills, but keeping track of what you owe is critical for any enterprise. The way your accounting system manages the outflow aspect of your funds can fluctuate. Below are some of the very useful reports payable (A/P) attributes )
Purchase ordersManaging your purchases and everything you owe is one of the main tasks for bookkeeping applications, but how it functions might differ, from making simple purchase orders to subsequent quotes all of the way through to payment and purchase.
It is easy for a business to eliminate track of all those credits vendors often hand out, possibly as rewards or yields. But, credit memos are as valuable as money, thus a system that can track them helps keep costs down.
Automatic paymentFrom scheduling bank payments and direct deposits to printing tests, many A/P modules can completely automate your payment procedures, ensuring you do not fall behind.
IRS tax formsHaving a database of the most frequent tax forms, such as the 1099 and 1096, can save a great deal of time. This is particularly true if your accounting system can enter all the vital data on the types for you and file them electronically with the IRS.
3. PayrollBelow are some of the best payroll features for accounting program.
Variable wage schedulesWhether your employees are either paid by the hour, then a system which can accurately calculate what you owe them is vital. Problems arise when you have many irregular workers or part-time employees. Some workers may be compensated yearly, others weekly or biweekly, or as desired. Your applications should be able to handle different pay schedules together with different types of reimbursement (commissions, wages, profit sharing, bonuses, etc.) and benefits (health insurance, retirement programs as well as perks like paid parking).
Direct depositThis is essential for accounting applications to support nowadays, as most men and women expect their paychecks to be deposited directly into their bank accounts. Decent accounting software should let you set up scheduled direct deposit payments.
Automatic tax calculationsThis ranges from handling just the basic deductions to supplying sophisticated tax printing and tables applicable forms. Find out whether the machine supports new-hire coverage, cost monitoring, W-4s and W-9s. Does this manage monthly national tax deposits and quarterly national tax reports, such as Form 941? Does this take care of yearly reports and returns, like the W-2, W-3, Form 940 and 1099? Can it perform say tax returns for income taxation and unemployment insurance? Could it handle employees' compensation insurance policy calculations and obligations?
Cost reimbursements and deductionsIf your employees incur tax-deductible expenditures, like travel and entertainment expenses, you will need a system that could accommodate these reimbursements and be certain that payments comply with tax deadlines.
4. BankingIn the minimum, accounting software should have some kind of a link to your own bank accounts, helping you to make direct payments and import real time data from the bank into the accounting system. Some software can go much further.
Account reconciliationIf you've got more than one bank account, software that could keep track of them all and reconcile them is essential. Ensure that your program includes a general ledger purpose and checkbook reconciliation.
Bank deposit homeworkThese days, an accounting package that can not deal with the installation of basic digital deposits is unheard of, but you should check on what sort of digital payments it can deal with.
Check handlingIf you produce a great deal of payments by check, then a system which can print and process that your checks will save you a great deal of time. Look out for other features too, such as check voiding and telling of duplicate test payment.