What Is Accounting Software?

What is Accounting Software?

Accounting Systems Help You:

  • Visualize expenses and transactions across a company
  • Analyze asset depreciation and associated costs
  • Automatically pay employees and contractors
  • Develop budgets from historical data
  • Manage tax payments

Visualize expenses and transactions across a company

Accounting software enables businesses of all sizes to look at how money moves throughout a company. This can be done using the general ledger, accounts payable and accounts receivable features, which are included in the most standard of accounting programs. Some vendors offer greater insight into money movement through visualization features or notifications of money movement within a business. Here are some of the specific tools and functionalities that give companies more control and oversight of the financial process:

  • Transaction processing
  • Custom sub-ledgers
  • Check writing
  • Payable analysis
  • Vendor master file
  • Drill down
  • Bank reconciliation
  • Cash receipts
  • Online invoicing
  • Customer master file
  • Debt collection

Analyze asset depreciation and associated costs

Fixed asset management tools are a key feature included in accounting solutions. This function enables users to look at items such as real estate, vehicles and machines to analyze how their value changes and what costs they have generated over time. For example, with an accounting program, you could estimate the cost of repairs needed for an owned building along with other ownership costs such as utilities.

These costs are often accounted for separately within accounting solutions because they don’t quickly turn a profit. Fixed assets typically include a high upfront investment with some ongoing costs to facilitate and improve the rate of sales. Purchasing a new building for your brick and mortar efforts itself doesn’t generate revenue, but establishing a new location where items can be sold and marketed to potential customers can eventually improve your company’s bottom line.

Automatically pay employees and contractors

Instead of calculating and dispersing payroll manually, accounting software can conduct payments automatically. It can be especially difficult to manage payments to contractors, which is why some solutions include the ability to assist in payments to these individuals as well. Vendors may also include the ability for payments to be issued on a project basis.

A key component to automatic payments is the approval of employee hours and expenses, which in turn allows money to be dispersed to employees quickly and efficiently. By containing approvals, time-off requests, and salary information in a central repository, the payment process can be expedited.

Develop budgets from historical data

Accounting systems often have budgeting features that assist users in creating effective and attainable budgets. This is done through the analysis of historical financial data, which is used to inform realistic future goals. This feature can also be used to estimate project costs and set realistic expectations of the amount of capital and the resources needed to complete a project. These systems enable users to look at past budgets, review planned budgets across a company and to forecast financial needs.

Manage tax payments

Taxes are a tedious but important reality when it comes to your company’s financial compliance. The bigger your company gets, the more complicated taxes can become, which is why accounting programs often include the ability to streamline the tax management process. Some vendors offer auto-tax calculators so that you know exactly how much revenue to allocate for tax purposes. Additionally, if your business operates in different tax zones, the program can help you calculate owed taxes for each relevant location.

How Do I Select an Accounting System?

The functionality that’s included in an accounting program differs depending on the vendor that you go with. This is why it’s important to keep factors such as your company’s specific needs, business size, and software budget in mind when selecting the system that’s right for you. Because finding the right vendor for your organization can be so difficult, we at SelectHub have created an easy-to-use interface to help you compare accounting vendors to find the one that aligns with your goals. Check out our accounting requirements checklist or our list of the best SME accounting software to learn more about the available systems and to see what you need out of your program.

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Enterprise accounting articles are written and edited by:

Mariah Hansen

Lead Editor

As the lead editor at SelectHub, Mariah edits and manages content for more than 40 different software categories, as well as writing for a couple of them herself.

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Khaleel Hayes

Market Research Analyst

Khaleel Hayes is a market research analyst for SelectHub who crafts content for manufacturing, accounting, PLM, and PSA.

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Thought Leaders

SelectHub has sought out and invited thought leaders to contribute to our Accounting industry articles and resources. These thought leaders ensure we deliver quality content with the most accurate information, focusing on what matters most. No thought leader is compensated for their contributions, but shares our belief that information should be democratized so everyone can make the best decision.

Hitendra Patil

Director of Customer Success, AccountantsWorld

Hitendra R. Patil, the author of  Accountaneur: The Entrepreneurial Accountant , has been named
one of the Top 100 Most Influential People in Accounting from 2017 to 2019. He has also been among the Top 10

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Browsing for the best accounting software that matches your accounting preferences is similar to walking into a bakery and looking for the perfect donut. There are so many varieties and flavors to choose from that you get overwhelmed. We can relate to that. Nevertheless, have you ever considered investing in an online accounting system? You can thank your lucky stars because our handy-dandy research team has dedicated time to searching for and finding the best online accounting software to compile a list of the top choices for small and mid-size business for the coming year.

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The Best Free Accounting Software For 2020

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Shopping for the right accounting software is like shopping for a new suit. You want a solution that’s uniquely tailored for you and your firm’s needs. This may sound like an ancient treasure hidden in a pyramid, but free accounting software exists and they possess tools to enhance your bookkeeping practices with automatic processing, reporting, invoicing and more. Thanks to SelectHub’s top-notch research team, we’ve developed a complete list of free accounting tools.

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Whether your company is an enterprise or a local mom-and-pop shop, keeping up with bills and invoices should be one of your top priorities next to keeping your customers satisfied and delivering top-notch products or services. Our research team has composed a comprehensive list of the best billing and invoicing software to simplify your enterprise accounting software needs. Before we proceed to our list, it’s important to know some of the recommended features that come with this software.

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The accounting industry is updating its business practices to enhance productivity and remain relevant among their competitors and clientele. One upgrade the accounting industry is implementing is automation. Accounting automation is an accounting solution that utilizes artificial intelligence (AI) to maintain repetitive bookkeeping duties such as data entry and analyzing crucial documents.

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Choosing the appropriate accounting software for your small business can be as challenging as playing a game of chess. If you’re not ahead of the game or you make a wrong choice, you can jeopardize your business’ profitability. Luckily, our five-star research team at SelectHub has you covered with our top five picks of small business accounting software.

Before you review our choices for the best small business accounting software, it will be helpful to know some of the prominent features this software has.

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Accounting Software Requirements Checklist

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Thanks to automation and AI, accounting software is one of the most transformative tools a business can adopt. ClientWhys CEO Lee Reams remarks, “Free from the tedious tasks, accountants will be able to focus their efforts on developing KPI’s, budgeting for growth and assisting in improving cash flow: more CFO like advice without the cost.”

But they’re also simple solutions that exist if you’re not amassing a team of mini-CFOs. It’s really up to you to decide what your business needs from your next system. To guide you through this process, we’ve created an accounting software requirements checklist. Use it to determine which accounting software features you need and which you don’t.

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Accounting definitely doesn’t have a reputation as the most exciting business function, but that doesn’t diminish its importance. Accounting is the process that keeps the world going, both in business and our everyday lives. That’s why it’s imperative users have access to all the accounting software features they need to get the job done. But what accounting features do they need from accounting software?

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