Accounting software is a tool used to keep records and process transactions such as billing, invoicing, payroll, account receivable, payable, etc. The main purpose of accounting software is to meet the internal and external financial expenses and keep a record of it.

It is the systematic measurement, verification, interpretation, summation, and classification of financial data.

1. Invoicing & Billing

With this integrated module, you can automate mundane tasks like payment collections from clients by preparing invoices in time. Besides, it helps in adjusting operations to new and effective payment methods.

2. Payroll

Your accounting software also supports a plethora of payroll features. Thus, you can calculate and process employee payments, print checks without delays, and meet all the tax requirements without any error.

3. Bookkeeping

Right from dealing with your sales and purchase ledgers to reconciliation with the general ledger, bookkeeping streamlines your accounting operations to a great extent.

4. Budgeting & Forecasting

This comes as a bundled module in your accounting software. As it interprets your financial performance for the current year and also helps to get an estimate of the budget for the coming year, you can set optimistic targets.

5. Fixed Asset Management

With this feature incorporated in the accounting software you purchase, you can rest assured that your financial data are managed accurately. It comprises other features such as depreciation calculation, cost records, audit history, etc.

6. Inventory Management

This feature gives your business the ability to control and administer all products' availability and movement. Besides, it alerts you in case of understocking or overstocking.

7. Expense Management

All your work-related expenses are taken care of by this module. Right from submitting the expense records to processing the payment, you can view everything under a single window.

8. Accounts Payable & Accounts Receivable

These are fundamental financial records that help you keep track of all the business transactions. Automating these processes help collect and submit payments seamlessly.

9. Bank Reconciliation

With this feature, you can make sure that your financial data is accurate. It compares bank statements with your account holder records; thus, ensuring no errors occur.

10. GST Filing

It lets you auto-populate GST on transactions, send GST compliant invoices, record e-Way bills, and ensure that your company remains compliant with GST regulations.

11. Multi-Currency Support

Most of the accounting software supports a wide range of currencies, i.e., it easily converts between different currencies so that you can send and receive payments and quotes without any hassles.

12. Reporting

It helps key a tab on all the key metrics of your organization, including profits, losses, balance sheets, and more. Hence, you can make informed decisions for long-term success.

Here are the top features that customers keep in mind while buying accounting software:

1. Optimized Business Operations

The main purpose of an accounting solution is to help businesses streamline and automate their accounting procedures. This results in increased efficiency and productivity at work.

For starters, it removes the redundant work and employees have more time to focus on more important tasks at hand. And second, it saves you from any kind of miscalculations. Thus, it speeds up the entire processing times.

2. Reduced Operational Cost

By implementing accounting software that suits your business needs and budget, you can save on outsourcing. You also save on printing and paper costs.

And if you wish to install a cloud-based solution, you don’t even have to invest in infrastructure.

3. Automated Record-keeping

An accounting system automates the process of bookkeeping. From categorizing your transactions to reconciling your bank accounts, it streamlines the entire process. The solution has the ability to compile data you enter into different applications. It then generates reports based on those data.

Furthermore, an advanced solution can even analyze business practices and identify trends in your company’s money flow.

4. Simplified Tax Compliance

Most accounting software come well-equipped with a tax planning module that enables you to store and organize invoices, receipts, and income statements on a single platform. It then automatically calculates the amount of tax to be paid.

You also get detailed reports on the amount of tax you have paid previously. And some advanced system even allows you to e-file tax returns.

5. Secured Database

Another important benefit of most used accounting software is that you can keep your files and documents protected. It has the capability to restrict access to admin-based control, which makes it easy to protect confidential information from unauthorized personnel.

Besides, you don’t have to worry about natural calamities that can destroy your files. Even in case, your files get deleted by mistake or the system crashes, you can always retrieve it from the cloud service within a specified time period.

6. Reports

Best accounting software not only helps you to keep track of your finances but also includes banking transactions as well as sales revenues and investments. The software that can generate reports saves a lot of time and effort from the company.

7. Communication Between Departments

Accounting software manages the financial processes of the whole firm like employee salaries, orders of customers, and much more. This function comes with the feature of allowing multiple users to connect to each other to make the work smoother.

If you need to deal with your credit cards and investments, bank accounts as well as your income and expenditure, you can have it all in one place on your smartphone or PC.

8. Cloud computing

Cloud computing is the latest way of using an easy accounting system through different gadgets. It allows multiple users and also keeps the data secure using Online Accounting Software. What’s more, is that it is quicker than the desktop installations.

9. Ease of Use

Accounting procedures involve complex processes and calculations. That’s why the best accounting system offers an intuitive interface to work in. All the information is neatly arranged and accessible from a single dashboard.

10. Customization

Every company has different requirements. That's why most accounting software packages allow customization. There is no one-solution-fits-all, therefore you are given the option to add or delete modules/functionalities to fit your order.

Based on the different types of user requirements, accounting software can be classified under various categories. User requirements are generally based on the following factors

A) Based on Size of Business

1. Spreadsheet Software

Spreadsheet software is the most affordable and simplest of all forms of accounting solutions and highly preferred by businesses having low transaction volumes. The best accounting system seamlessly collects and organizes data, and allows you to place the data in neat rows and columns, which can later be organized or arranged by information type.

However, the downside is that though you can easily configure spreadsheets, they are prone to errors as the slightest inaccuracy in entering data or miscalculation will end up generating erroneous financial statements.

2. Personal Accounting Software

Personal accounting software is ideal for small businesses and start-ups. It helps you eliminate the need for manually entering draft amounts or balancing your checkbook.

A personal accounting system automates the process of tracking big transactions and allows you to take charge of your assets and investments such as fixed deposits, mutual funds, etc. It comes with simple budgeting tools and an astounding array of features to make your financial life simpler.

3. Commercial Accounting Software

Commercial accounting software has been designed to handle the accounting needs of small and medium-sized businesses. Commercial accounting software such as Quickbooks comes with a host of impressive features that automatically generates comprehensive financial reports and summarizes data to portray the financial state of a business.

What’s more, commercial accounting tools can be easily customized to the needs of your organization. It also comes with a robust error detection mechanism to obviate the entry of inaccurate data.

4. Enterprise Accounting Software

It is best suited for managing the complex operations of larger companies. The best enterprise accounting software comes with a simple interface and offers multiple modules such as payroll, accounts payable/receivable, reconciliation, billing, invoice, inventory management, etc. to help enterprises improve their workflow processes.

This accounting system also provides inputs into the corporate level strategy. It also generates a graphical representation of accounting metrics, allowing CFOs and managers to evaluate financial information whenever required.

5. SaaS Accounting software

SaaS (Software as a Service) based accounting platforms are emerging as a popular choice for businesses looking to minimize overhead expenses.

Since SaaS solutions reside in a shared environment and are based on subscription models, the cost of software and hardware licenses is low compared with the conventional models.

6. Custom Accounting Software

This software is developed for businesses that want to customize their software as per their accounting needs. Businesses that want to tailor their report formats, invoices, data fields, etc. generally opt for customized accounting solutions.

The cost of this software depends on the number of customized features included, the number of users supported, and maintenance, support, and security services offered by the vendor.

B) Based on Deployment

1. Installed (On-Premise) Accounting Software

This accounting system is first downloaded on your PC and hosted on its server. An installed accounting solution can be accessed only on the device it is downloaded on. Locally installed accounting platforms are feature-rich, more secure than cloud-based applications, and do not require internet access.

Since this software comes with sophisticated features, therefore, they are a bit difficult to use and customize. Moreover, since it stores data only on your PC or laptop, you cannot access the data online or share it with others.

2. Cloud Accounting Software

Cloud accounting software is known for its scalability, ease-of-use, and cost-effectiveness. Cloud accounting solution sends data into the cloud, where it is processed and sent back to the users. This software can be used from your PC as well as mobile and tablet devices with a stable internet connection.

The greatest advantage of cloud accounting tools is that it eliminates the need for installing and maintaining accounting software on individual desktops. If you have offices in multiple locations, it also enables your team members to access the same financial data remotely through the internet.

3. Hybrid Accounting Software

Hybrid accounting solutions include sophisticated features of hybrid accounting software at a reasonable price, they are considered ideal for small as well as mid-sized businesses that require sophisticated accounting tools.

Like SaaS-based accounting solutions, this software offers accessibility from multiple locations via the internet.

C) Based on Functions

1. Billing & Invoicing Software

Billing and invoicing software is essential for completing the daily business tasks such as documenting financial activities, writing checks, and notifying customers about outstanding payments.

Accounting software automates invoice approval workflow and also sends automated payment alerts to your customers on your behalf. The software also comes with modules for client management and report generation.

2. ERP Software

Accounting software offers ERP software functions to help businesses plan, forecast, and generate reports on a company’s financial results. The best ERP software comes with a scalable and comprehensive set of functionalities to help small businesses, as well as multinational corporations, streamline their accounting operations.

3. Payroll Management System

An efficient accounting software is capable of performing a wide array of tasks such as automatic payroll calculation, depositing salary directly into your employees’ bank accounts, generating payslips, tax forms, and reporting.

4. Time and expense management systems

Time and expense management systems come with time tracking module to help you keep tabs on the time spent on different tasks by your employees. The software also records the time, labor, and costs associated with different projects so that you can send invoices to your clients with solid evidence of time spent on their projects.

Accounting software has now become mainstream for businesses of all sizes. But choosing the best from a plethora of vendors can be quite overwhelming. It is crucial to consider a vendor that possesses the agility to adapt to your market needs.

Taking this into consideration, we have curated top accounting software vendors by company size here.

Accounting Software Comparison for Enterprises

As your company grows, small or mid-sized business accounting software doesn’t always cut the chase. So, if you are outgrowing your existing accounting solution, it’s time you consider implementing an enterprise accounting software.

It comes with an ability to manage all your financial activities right from accounts payable and accounts receivables to payroll.

Some of the leading accounting software for enterprises include Sage 50 Cloud and Xero.