The right accounting package for your Startup
Disclosure: This article is not intended to replace in any way professional accounting advice.
6 steps to choosing the right accounting package for your start-up
I’m a firm believer that in business you need to spend money to make money. With my start-up Nudge Accounting, I like continuing to re-invest money into it so we can continue to improve and make things better for our start-up and small business clients. Being good with money isn’t about not spending money, it’s about knowing what your numbers are so you can make the best decisions for your business.
You might think it’s a bit premature to start worrying about accounting software for your start-up. Maybe it’s not that important until you start bringing in some serious money? Wrong. Knowing your numbers is a must. By tracking your numbers you know where your sales are coming from, how much you are spending and whether some of your investments will generate a return or are a black hole and you just need to cut your losses[i]
Start-Ups often get stuck with knowing where to start when it comes to accounting software.
So how do you choose the right accounting package for your start-up?
- Decide on cloud versus desktop
Being able to access your accounts from the cloud is super handy. It doesn’t matter whether you’re working from your office, a home computer or an internet café overseas. As long as you have an internet connection, you can log-in to record and see how your business is performing. Most of the cloud-based programs also have automatic bank downloads, which means you don’t need to waste your time uploading bank statements. It also means that you can give online access to your bookkeeper and your accountant. This means no more emailing of files back and forth.
- Do you invoice your clients?
If you invoice clients, make sure you check the number of invoices which are included as part of the accounting package. Often you’ll end up paying for unlimited invoicing or being bumped up to a more expensive version of an accounting package. It’s also important to ensure that if you opt for a non-Aussie based software provider that they are also compliant with Aussie tax requirements.
Suggestions – It really depends on how creative you want your invoices to look. Most accounting packages have their standard invoicing templates, but the ability to customise is quite limited. Within Xero you can do a fair bit of customisation, and they also have a new online invoicing feature which means you can see whether a client has viewed your invoice.
- Do you track inventory?
Do you stock inventory and want to track it within your accounting software? Not all accounting software has the ability to track inventory… even a lot of the big ones.
Suggestions – If tracking inventory, SAASU and MYOB Account Right Live are a good place to start. Some of the other accounting packages have an inventory add-on through an external provider which you need to pay extra for. It’s best to really do the research here.
- Do you have staff?
If you have staff, you’ll need to prepare payslips. This involves calculating not only their total wage, but also the tax to take out and the superannuation too.
My payroll favourite – there are a few options here. Most Aussie software providers do a pretty good job when it comes to payroll. Try to steer away from a lot of the desktop accounting providers which make you pay an extra upgrade fee each time the tax rates change.
- Do you have overseas sales?
If you deal with overseas currency, then you’ll need accounting software which includes that functionality. This isn’t as easy to come across as you may think, with SAASU and Xero being the key players in this space. Be careful though, as you’ll end up paying extra to use this feature.
- How much are you willing to pay?
Obviously, how much you are willing to pay for your accounting software is something which needs to be considered. On average, with most of the software players in the Aussie market, you are looking at paying roughly between $25-$50/month.
Some options – If you have no staff yet and are looking for a free option (yes, free!), a good start is Wave. Based out of Canada, they provide the basic invoice and expense tracking that Aussie start-ups need. Just make sure when you use the invoicing function that it’s compliant with Aussie tax rules by including your ABN and making sure it says “Tax Invoice” on the top – all of which can be customised in Wave. Whilst there is no Aussie payroll feature, Wave connects with a lot of the Aussie banks which means you can get automatic bank feeds and downloads. Another option worth checking out is Aussie company Reach Accounting. Whilst not free, it is very reasonably priced at $15/month. Reach does not support automatic bank feeds, but it does include a lot of the features of the more expensive Aussie-based software.
The key is that you get the right package that suits your start-up. At the end of the day, what you record and the information you get from these packages will help you run your business more effectively. So make sure it works for you.