How Do Small Businesses Use Accounting Software?

Kim Mays
Slide Show

The 5 Mobile Apps You Really Need for SMB Success

Starting a small business isn’t easy and among the most important decisions that can be made are how to organize and manage your finances. Today,  cloud-based accounting software would seem to be a smart, simple choice. But a recent accounting software research report by Capterra, a free service that helps businesses find the best software for their needs, found that the majority (61 percent) of the 500 surveyed small businesses use locally installed software instead.

Not really surprisingly, the top software choice was QuickBooks (48 percent), with the next closest choice being Microsoft Dynamics (11 percent). Only 39 percent of those surveyed chose a cloud-based version of their accounting software, despite the fact that so many companies have opted to use the Web for other types of software. The report didn’t identify a big difference among businesses that chose one over the other, though it did offer reasons for adopting the cloud:

There was no meaningful revenue split between businesses with web-based accounting and those with locally installed packages. Businesses are just coming around to the value of an accounting system that can be interacted with at all times, from anywhere.

By putting your information in the cloud, you increase the ease of collaboration, you put your users in touch with it even if they’re on the road (hello, travel receipts), and it gives you built-in protection from local data failures and other catastrophes.

The survey did find that using accounting software is integral to keeping financial problems at bay. Fifty-four percent of respondents found that their chosen software decreased their financial errors—32 percent said it was a significant decrease and 22 percent found a slight decrease. The importance of using accounting software should be obvious—it saves time with data entry, makes reconciling accounts simpler, and helps business owners more easily pay their employees. It also can provide protection from financial mistakes or accounting errors that could result in an IRS audit—any business’ nightmare. Keeping your finances in check can also help the business grow.

I did find it surprising that some businesses (19 percent) didn’t even demo accounting software prior to selecting their vendor. Most small businesses demoed at least two (38 percent) and 23 percent tested three or more kinds.

It also seems that getting the business up and running with accounting software is a big rush as the majority of respondents took less than six months to select their software. Only about 11 percent took nine months or longer to make their selection.

Lastly, the top reasons businesses gave for their software selections were functionality and features, followed by “ease of use” and price. Users said they most wanted mobile apps for their software—which is surprising considering the high number of businesses that chose locally installed vs. cloud-based installations.

Kim Mays has been editing and writing about IT since 1999. She currently tackles the topics of small to midsize business technology and introducing new tools for IT. Follow Kim on Google+ or Twitter.

Subscribe to our Newsletters

Sign up now and get the best business technology insights direct to your inbox.


Add Comment      Leave a comment on this blog post
Sep 29, 2015 10:50 AM Thomas Thomas  says:
This is interesting article. I shall share more information: http://punicapp.com/blog/pages/176/5-reasons-to-create-a-mobile-application-for-business/ Reply
Oct 20, 2015 10:52 AM Kathleen Suite Kathleen Suite  says:
Typical article and comments by non-developers and non-coders who think they should be able to "upload via ftp" and everything should already be done for them. Just because you learned how to use FTP doesn't make you a "coder" or a "developer". Reply
Nov 3, 2016 4:34 AM boberdoo boberdoo  says:
Oh I’m so glad you posted this. I am sure they will really helpful! Thanks for sharing these tips! Reply
Feb 14, 2017 6:46 AM Deepa Khatri Deepa Khatri  says:
Small businesses always looking for the tactics to get closer to their goal, mean while accounting is most important thing for every business to maintain a sheet that can speak about the expenses & profit. If you do it manually it takes much time to get results but if using accounting software then it would be finished within certain amount of time. This can lead a businessman to think more advance about the business. Reply
Apr 12, 2017 11:18 AM aliceadven44 aliceadven44  says:
Very interesting blog.Small business's owner have not any experience of running business so they have to be careful when they are maintaining their accounts. Accounting software can help small business to manage their accounts and payroll automatically. It can save your time and cost as well. Reply
Jul 5, 2017 4:50 AM Tom Tom  says:
The article very efficiently explains the different perception of business owners regarding accounting software. It explains that today also businesses are skeptical about using cloud-based accounting system and rely more on Quickbooks & Microsoft dynamics which are reputed names in the industry. Though most of the businesses consider record keeping as a must exercise to avoid stress and financial mistakes but have their doubts about using a software. Shocking information!! Reply

Post a comment





(Maximum characters: 1200). You have 1200 characters left.




Subscribe Daily Edge Newsletters

Sign up now and get the best business technology insights direct to your inbox.

Subscribe Daily Edge Newsletters

Sign up now and get the best business technology insights direct to your inbox.