Evaluating Accounting Software

Accounting software can often be a major expense for many accountants, but selecting the right software requires a systematic process. This guide will help you understand how to evaluate different types of accounting software. We’ll explain how to choose accounting software for accountants and tax practitioners, what features it should have, and more.

In this guide, we review the aspects of Evaluating Accounting Software, accounting software selection process, accounting software for accountants, and software for accountants and tax practitioners.

Evaluating Accounting Software

When you’re looking for a piece of accounting software, there are lots of things to take into consideration. It’s not just about choosing the cheapest option or the one with the coolest feature; it’s also about finding something that will work for your business. We’ve put together this list of questions and answers to help you get started on your search for accounting software that meets your needs.

Your accounting software will probably be set up to work specifically with your business.

Your accounting software will probably be set up to work specifically with your business. This means that the software will have all of the features you need, and will be designed for you to use in a way that makes sense for how you operate.

Your accounting software should also allow remote access via the Internet or another communications network, such as a virtual private network (VPN). This means that you can log in from anywhere there is Internet access and access vital information about your company’s finances, regardless of whether or not it’s being used by someone else at the time.

Whenever you buy a new piece of computer software, you have the option of upgrading it to support more functions.

If you buy a new piece of computer software, you have the option of upgrading it to support more functions. The upgrade may be free or might cost money. Upgrades allow your accounting software to keep up with changing industry standards and competition from other companies.

If you’re running a small business or organization, upgrades are especially important because they let you stay competitive in your field by giving you access to the latest features. For example, if your current accounting program does not have online shopping cart integration capabilities but one of its competitors does have this feature and adds it in an update, then upgrading will give you access to that capability as well so that your customers can use it when they pay their bills online (or when they order books from Amazon!).

If the software doesn’t support all your needs, it may not make sense to pay for the upgrade.

If the software doesn’t support all your needs, it may not make sense to pay for the upgrade. If you already have a system in place, it may be better to stick with what you have. If you have a lot of accounts, it might be worth upgrading.

You may be able to access your accounting files through an online version of the software or through a third party program that connects to your data network or directly to your accounting system.

The accounting software you choose will vary depending on what features are important for your business. You may be able to access your accounting files through an online version of the software or through a third party program that connects to your data network or directly to your accounting system.

Not all computer software is designed to work with all types of accounts, so it’s important to see what’s available before making a decision.

It’s important to know that not all computer software is designed to work with all types of accounts, so it’s important to see what’s available before making a decision. You need to make sure that the accounting software you choose is compatible with your business, has the right functionality and can support all your needs.

There are lots of options out there!

There are lots of options out there!

If you’re looking for accounting software, the first thing to do is ask yourself “What type of business am I?” and then find a solution that matches your needs. You’ll have your pick from a host of different types of software—accounting applications, bookkeeping systems and payroll systems, among others. The important thing is finding the right one for your business; not just something that does what it’s supposed to do but also something that will work with your accounting system (if you have one) or integrate easily into it if possible.

accounting software selection process

One of the greatest challenges faced by all business entities is the selection and implementation of an accounting software system that matches the present and future needs of the organization. Overall, it should complement existing business practices and be adaptable to innovations in technology. Other key required elements are compatibility with industry- standard technology, the ability to customize the system as required to fit the evolving needs of the business, and scalability to keep up with the growth of the organization.

Selecting the right solution requires a comprehensive understanding of an organization’s business operations, including the processes involved in day-to-day activities and how the software will handle these activities across all modules. Aside from traditional accounting tasks – general ledger, payroll, banking, purchasing, inventory and accounts receivable – other desirable metrics to measure include hours worked, product and/or production cycles, equipment utilization, sales commissions, and the use of the Internet for e-Commerce platforms, just to name a few.

A well-developed system that is properly planned and implemented can provide improved cash flow, more timely and accurate information to enhance management decision-making capabilities, control over the organization’s critical data, and an overall solid foundation for the organization’s future growth.

STEP #1 – Identify the Resources

The accounting system will process and generate data used throughout the entire organization. Participation in the selection and implementation process should be comprised of a cross- functional group of associates within the business.

• System Users – People who process transactions daily. They are interested in software that is logical, intuitive, and easy to use.

• System Managers – People who manage the system users. They will direct the system users to utilize the software efficiently, have a detailed understanding of the financial information within the system, and be knowledgeable of management’s reporting needs.

• System Customers – Users of financial information are found throughout the organization across all levels of management. These “customers” rely upon detailed and summarized data for daily and long-term decision making. The information must be collated in both financial and non-financial terms.

• System Sign-Offs – This group includes representatives from Information Technology, Accounting, and Executive Management. They assume an ownership role in the selection, implementation, and ongoing maintenance of the accounting software.

A project manager should be assigned to guide the entire decision making process. That person will gather and organize all relevant information about the systems being considered, coordinate meetings with internal and external participants, and regularly update senior management on progress.

STEP #2 – Prepare a Needs Analysis

The system managers and users should prepare a needs analysis for their respective departments or areas. These analyses will become the foundation of the defined requirements of the organization’s overall business needs from the new accounting system. The needs analysis will list all the tasks and transactions performed throughout the organization, and it should also define the strengths and weaknesses of the existing environment. The following should also be accomplished during the needs analysis:

• Flowcharts should be prepared to diagram how the various identified tasks are performed. Each chart should include a step-by-step process for the specific task and how the data from that task is used for decision making. The goal is to identify how information flows throughout the organization and determine where, if any, bottlenecks arise in the process.

• Samples of forms (checks, invoices, pick tickets, production tickets, etc.) should be cataloged including sample reports produced by the existing accounting system and by outside software such as word processing and spreadsheet documents. The analysis should determine whether all of these documents are needed, and if so, how to automate and eliminate manual intervention.

• The Analysis should ask questions about challenges in the current system:

o What manual tasks can be automated?o Where does the organization experience productivity loss and errors?o How does inaccurate and untimely information negatively impact the business?o Is information requested that is unable to be delivered in an effective manner?o Does the accounting system integrate with existing or planned business initiativessuch as e-commerce?o What data is needed to make strategic business decisions?o What information is required to forecast and manage cash flow?o How are assets (cash, inventory, receivables, and fixed assets) managed? o How will automation allow the business to grow?

STEP #3 – Choose an Applications Consultant (Optional)

You must determine if your organization has the requisite expertise and available time to successfully select and implement the new accounting system, or if you must hire a software consultant to assist in the process. The cost of a consultant should be budgeted as part of the overall expenditure for investing in the software. Using a consultant can be beneficial because they have developed specialized expertise by purchasing and installing accounting systems many times for various organizations. Utilizing their experience can be more cost effective than going through the process yourself and incurring internal time costs as well as the cost of trial and error mistakes.

Further, you and your team will benefit from additional training during the implementation process which will help your organization obtain the greatest benefit from the accounting system’s capabilities in the long run.

STEP #4 – Evaluate Prospective Products

Many accounting systems perform the same basic accounting functions; however how they perform those tasks can vary greatly. When choosing candidates, consider the following:

• The Companies – You should choose vendors that are respected in the industry, but also consider how long they have been in business, if they have plans for program expansions, and then check the references of customers who are currently using their systems.

• Product scalability – If you begin with one product and your needs grow; you must know that you will be able to seamlessly transfer your data to an upgraded product.

• Customization and compatibility – You must have the ability to customize the software to fit your business needs, and the system should also be compatible with other third-party products that you use.

• Ease of Use – Ideally your system solution should be logical, intuitive and easy to use. Is it easy to navigate between modules, is online documentation provided and is the vendor’s technical support group effective in answering questions?

• What you get – Understanding what is included with the base package is important as vendors will claim their system has many capabilities, only to later tell you they come at an additional cost. This also affects how long it will take to install and implement the system.

Other factors that you will evaluate include capacity, data validation, ease of data input, error handling, security, and reporting capabilities.

Note: An alternative to investing in hardware, software and technical support is to utilize an Alter native Service Provider (ASP), which allows you to rent the use of your solution. This alternative comes with both positive and negative consequences, but it may be an option for your team to consider.

STEP #5 – Implement the Solution

This portion of the process can be both exciting and frustrating. The quality of your end product depends upon how effectively you carried out steps 1- 4, as well as how you carry out the implementation. Key elements of this step include proper definition and set up of the underlying databases of the new system, staying “vanilla” at the outset – meaning postponing enhancements to the base system until you are running successfully, providing training to all stakeholders of the system, constant reviews during the process to assist all users in becoming familiar with the new system, and implementing at a pace that meets deadlines without rushing so much that mistakes are made and unnecessary tension is created. 

At first, the new system should be run in parallel with the existing system in order to verify data integrity. Once it is fully operational, reviews should be done one, three, six and twelve months after implementation. Actual results should be benchmarked against original goals and objectives.

accounting software for accountants

As an accountant, accounting software is an important tool to work effectively and accurately. However, the large number of available accounting software makes it difficult to choose. The struggle is to decipher a full-featured type giving value for money, and functioning optimally. We’ve discussed with seasoned accountants and narrowed down the best five available.

Be sure to visit the company page of each of these software plans to learn more about their full service and decide which fits your scope of work and budget.   

Quickbooks Desktop Premier

The QuickBooks desktop premier outperforms other types of QuickBooks software designed for accounting purposes. A locally installed software with an improved integrated system capable of running complex and multiple accounting processes.

Up to 5 people can access it and there are industry-specific features. The reporting style is detailed and complex. It’s especially suitable for accountants but may take some time for an amateur to fully grasp the system.

Accountants can track expenses, generate invoices, and generate complex reports all at a three-year price tag of $649.99. The license expires after three years and must be renewed for continued access to the tool.


Xero is cloud-based accounting software that allows unlimited users. It comes with numerous features making it suitable for accountants working in medium and large firms. With over 16 million users comprising of regular business owners and professionals in accounting, Xero is a recognized and top brand.

Alongside a strong accounting system, the reporting feature is complex and ideal for professional use. Xero’s pricing plan makes it accessible to accountants with different types of budgets and scope of work.

The smallest fee for a month is pegged at $9 but comes with several limitations (20 transactions and five invoices and bills) only suitable for small-scale accounting. Other improved plans are $30 and $60 with unlimited access and multi-currency support for the highest plan.

Sage 50cloud

Sage 50cloud has been around for a while. Despite the change in name over the years, the functionality is still top-notch. Sage is one of the few customizable accounting software on the market although this feature comes at a cost.

This accounting tool is not suitable for amateurs or accountants finding their feet. Only experienced accountants can navigate and effectively use Sage. Sage 50 Cloud pricing plans vary from single small users to advanced and large-scale accounting processes. First is a $50 one-month plan, a five-user $78.21 user one-month plan, and the comprehensive 40 users plan at almost $200. Some of the features are;  budgets, cash flow manager, year-end wizard, journal entries, job costing, and more.


FreshBooks, a Canadian-based accounting software firm offers easy access to accounting- systems to users across all platforms. Cloud-based software that functions seamlessly on all types of devices.

It works brilliantly on Android and iOS devices to perform a long list of functions. It gives payment reminders, customizable reoccurring invoices, online credit card payments, tax calculations, and a multi-currency system.

FreshBooks’ affordable plans include a $6, $10, and $20 charge. And each has varying access and benefits. With FreshBooks, all categories of users — greenhorns and experts can effectively manage financial accounts.

AccountEdge Pro

AccountEdge has been around for some time. With decades of accounting services, AccountEdge now comes with a couple of improvements for enhanced performance. It has robust features and high-grade reporting capability that makes it especially suitable for advanced or experienced accountants.

This piece of complex accounting software may be too difficult for an inexperienced accountant or an amateur business owner. A few AccountEdge features include processing payment, inventory management, full-service payroll, and direct deposit among other features.

The pricing is $149 one-time charge and $199 for a user per year. Then a $399 one-time charge and $199 per year. The second plan comes with more features since it’s a Pro version.  

software for accountants and tax practitioners

It is common for a tax practitioner to gain new clients. However, that likely means another tax practitioner is losing a client. The turnover of clients is one of the primary reasons a client will request the return of tax records from a CPA. Other possible reasons might include a pending lawsuit or the need to provide financial or tax records to a bank to obtain financing.

When responding to such requests, the tax practitioner must be cognizant of, and adhere to, the collective body of applicable professional standards and law, including the AICPA Code of Professional Conduct (AICPA Code); Treasury Circular 230, Regulations Governing Practice Before the Internal Revenue Service (31 C.F.R. Part 10); the authority of applicable state boards; and the Internal Revenue Code. A practical consideration is whether the CPA must comply with a request before being compensated for services already provided to the client.

This column examines the interplay of the aforementioned standards, including key definitions of the types of records that may be in a client’s file. In addition, this column provides practical guidance in responding to such requests. In this column, any reference to a “client” includes either a current or a former client, and a request for records includes a request for records to be provided either to the client directly or to a successor tax practitioner. “CPA” refers to an individual who has an active license to practice and thus is covered by Circular 230. Unless otherwise indicated, a CPA is also assumed to be a member of the AICPA.

Analysis of the AICPA Code

The AICPA Code and related Interpretations address the responsibilities of Institute members (and, by reference, of practitioners in those states where the governing board of accountancy has incorporated the AICPA Code into the state-specific code of conduct) when they perform professional services. Interpretations of the AICPA Code are adopted by the professional ethics division’s executive committee to provide guidelines on the application of the rules.

Rule 501, Acts Discreditable, states that “[a] member shall not commit an act discreditable to the profession.” Interpretation ET Section 501-1, “Response to Requests by Clients and Former Clients for Records,” guides a member in how to respond to a client’s request for records. The following terms are defined solely for use with Interpretation ET Section 501-1:

•Prepared by the member, such as audit programs, analytical review schedules, and statistical sampling results and analyses, and

•Prepared by the client, at the request of the member and reflecting testing or other work done by the member.

Note that Rule 501 was promulgated primarily from an auditing engagement perspective. As such, it is at times difficult to interpret and apply in tax situations.

A member’s failure to comply with a client’s request for a return of client records could constitute a violation of Rule 501 as an act discreditable to the profession. Client-provided records include both original and electronically reproduced documents that the client provided directly to the member or that were provided on behalf of the client and include documents prepared by the client, client employees, or a third party. Examples of client-provided records are general ledgers; trial balances; asset purchase or sale documents; brokerage statements; Forms W-2, Wage and Tax Statement; and receipts for charitable contributions.

When a client requests member-prepared records or work products that are in the member’s custody, the requested documents (copies of the originals should suffice) should generally be provided to the client, unless the member and client have agreed otherwise. As ET Section 501-1 indicates (see below), there is some flexibility in the format of the documents that must be provided.

In several situations, member-prepared records related to a completed and issued work product may be withheld:

ET Section 501-1 acknowledges that a member’s working papers are the member’s property and does not require a member to provide those records to the client; however, state or federal statutes and regulations or contractual agreements may require the member to do so.

Additional guidance outlined in ET Section 501-1 states:

Since tax practitioners are governed by several sets of ethical rules, requests for client records are more complex in the tax engagement. The different rules do not provide consistent standards for tax practitioners in responding to client requests. Many times, the client has not paid for the professional services, and the CPA may wish to withhold requested records until the client pays the unpaid professional services invoices. This exhibit summarizes the rules in these situations.

Circular 230 applies to professionals who practice before the IRS. Section 10.28(a) of Circular 230 generally requires a practitioner to promptly return all “records of the client” necessary for the client to comply with his or her federal tax obligations. Records of the client include:

However, “records of the client” do not include any return, claim for refund, schedule, affidavit, appraisal, or any other document prepared by the practitioner or the practitioner’s firm pending the client’s fulfillment of his or her contractual obligation to pay fees with respect to the document.

A dispute over fees does not generally relieve the practitioner of his or her responsibility to return client records, as previously defined. If applicable state law allows the practitioner to retain a client’s records in the case of a fee dispute, the practitioner must return the records that must be attached to the taxpayer’s return. However, the practitioner must provide the client with access to review and copy additional records of the client that are necessary for the client to comply with his or her federal tax obligations.

Example 1: M, CPA, has been engaged by client J to prepare J’s 2013 individual federal and state income tax returns. Since not all of J’s Forms K-1 were received by the original filing deadline, J agreed that M should file an application to extend the returns, and valid extensions were filed. After the extensions were filed but before the returns were completed, J informs M that he is moving his account to Whitney CPA firm, which will complete J’s 2013 tax returns. M agrees and submits an invoice for the time incurred to extend the 2013 returns. J fails to pay the invoice. J requests the return of (1) the documents he provided (e.g., Forms W-2, 1099, 1098, etc.); (2) the extension calculation; and (3) Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return. M is a CPA and a member of the AICPA.

M prefers to return the minimal number of documents that fulfill her professional responsibilities until J pays the invoices. What documents, if any, may M withhold until she receives payment from J?

As a CPA and a member of the AICPA, M is subject to the requirements of the AICPA Code and Circular 230. Both governing bodies will generally require M to return the documents (e.g., Forms W-2, 1099, 1098, etc.) that J provided to her to be used in preparing his return (and extension).

Under AICPA Code ET Section 501-1, the extension calculation that M prepared would likely be considered the “member’s working papers,” as it was prepared by M in support of the final work product, which in this case is the extension, Form 4868. The member’s working papers are the member’s property and do not need to be provided to the client unless a requirement is imposed by state or federal authority or by contractual agreement. Circular 230 does not include the practitioner’s working papers in the definition of “records of the client” and thus should not prevent M from withholding the extension calculation until she receives payment from J.

If applicable state statutes and regulations permit her to withhold the extension calculation, she may do so until she receives payment or permanently, since she is under no compunction by the applicable professional standards to release it.

The extension itself, Form 4868, would likely meet the definition of “member’s work product” under ET Section 501-1 and, thus, could be withheld for payment of the invoice related to the extension. Circular 230 also allows M to withhold the extension for payment, as the term “records of the client” provides an exception for any return or other document prepared by the practitioner pending the client’s fulfillment of his or her contractual obligation to pay fees with respect to the document. If applicable state statutes and regulations permit her to withhold the extension, she may do so until she receives payment. Note that, although Form 4868 is not a “return” for purposes of Circular 230, it is an “other document” and thus covered.

Example 2: Assume the same facts as in Example 1, except that J has paid the invoice related to the 2013 extension but failed to pay an invoice for his 2012 tax return. What documents may M withhold pending payment for preparation of the 2012 tax return?

Since the unpaid invoice does not relate to the documents the client is requesting, M would have no basis to withhold the extension Form 4868 under ET Section 501-1 and Circular 230. The analysis regarding the extension calculation remains constant, and she could withhold or provide it at her discretion. Note that M would have more leverage for payment if she had negotiated for payment of the 2012 return before commencing the 2013 tax work. The reasons for her failure to do so are irrelevant to the issue at hand and beyond the scope of this column.

Example 3: C, CPA, prepares and delivers the 2013 federal and state income tax returns for W Inc. However, W is disputing the amount invoiced for the return preparation and has notified C that it will be using P, CPA, for future services. L, the president of W, calls C and demands copies of C’s working papers to provide to P. Must C provide a copy of the W engagement working papers?

Generally, C does not have to provide copies of the W working papers as long as the fee dispute is unresolved. However, if the working papers contain any information that was previously presented to W that it needs to fulfill its future tax obligations, that information should be provided to W as required under Section 10.28(b) of Circular 230. This would include items such as tax depreciation schedules and tax inventory records prepared by C in the course of the engagement.

Example 4: Assume the same facts as Example 3 and that C used SuperTax software to prepare the return. P, the successor accountant, also uses SuperTax software, and W has requested a copy of the data file. Must C provide a copy of the SuperTax file to W?

There is no specific requirement that C provide a copy of the SuperTax file. However, if the SuperTax software was used to maintain W’s tax depreciation records, there would be a requirement to provide the file under Section 10.28(b) of Circular 230 and AICPA Code Interpretation 501-1. Section 10.28(b) provides that “[r]ecords of the client include . . . any return, claim for refund, [or] schedule . . . prepared by the practitioner . . . that was presented to the client with respect to a prior representation if such document is necessary for the taxpayer to comply with his or her current Federal tax obligations.” It appears that the depreciation records maintained using the SuperTax software would fall within this definition. Further, AICPA Code Interpretation 501-1 states that, with respect to member-prepared records or members’ work products, “The member is not required to convert records that are not in electronic format to electronic format. . . . However, if the client requests records in a specific format, and the records are available in such format within the member’s custody and control, the client’s request should be honored.” Considering Section 10.28(b) and Interpretation 501-1 together, it appears that C should furnish a copy of the SuperTax file to W if the depreciation records are maintained within the file.

Other Matters to Consider Before Releasing Client Records

Before releasing client records, the practitioner should consider and discuss with the client any concerns about the possible compromise of confidentiality under Sec. 7525, the Kovel doctrine (296 F.2d 918 (2d Cir. 1961)), or similar issues. In addition, if the records are being provided directly to a third party at the client’s behest, the CPA should be certain to comply with Sec. 7216.

Although not required by either the AICPA Code or Circular 230, it is advisable to consider documenting the request and release of client records in the member’s files to prevent misunderstandings between the client and practitioner. The practitioner may consider providing the client with a letter (to be returned to the practitioner) for the client’s signature, acknowledging receipt of the documents being requested by the client, the purpose of the request (e.g., for preparation of the client’s 201X tax returns), and the possible compromise of confidentiality. Some practitioners have involved legal counsel in drafting such letters, which may also include language protecting the rights of the practitioner, particularly when releasing the practitioner’s working papers.

Before releasing records, the practitioner should consider whether any conflicts of interest exist, such as a divorced or separated couple who have previously filed joint returns, that would require the practitioner to receive additional permission to release records from a party other than the requesting party. A conflict of interest may be an issue if the requested records are for an entity. The member should make certain that the requesting individual is an authorized person (i.e., officer of a corporation or general partner of a partnership) since the client is the entity, as opposed to the requesting individual. (See Mathers and Schrock, “Practical Approaches to Common Conflicts of Interest,” 45 The Tax Adviser 360 (May 2014), for a deeper discussion of matters relating to conflicts of interest.)

If a client requests that the records be provided to a successor tax practitioner (or anyone other than the client), the practitioner will need to comply with Sec. 7216; Regs. Secs. 301.7216-1 through 301.7216-3; and Rev. Proc. 2013-14, as modified by Rev. Proc. 2013-19. The member should also consider the need to have the successor sign a release indicating that the member will not be liable for the future use of any information contained in the records. (For more guidance, see Bond and Schreiber, “Current Tax Return Disclosure Issues Involving Sec. 7216,” 44 The Tax Adviser 546 (August 2013).)

A practitioner must adhere to multiple bodies of authority when responding to a client’s request for records. Knowledge of the relevant sections of the AICPA Code, Circular 230, and applicable state(s) public accounting statutes and regulations, as well as the interplay of Sec. 7216, will enhance the practitioner’s ability to effectively respond to a client’s request while protecting the practitioner’s rights to payments for services rendered. Notes: A revised AICPA Code of Professional Conduct will become effective Dec. 15, 2014 (and practitioners can choose to implement it earlier). Rule 501, Acts Discreditable, discussed in this column, will become Rule 1.400.001 in the revised code. Interpretation ET Section 501-1, “Response to Requests by Clients and Former Clients for Records,” will be Section 1.400.200.02 in the revised code. State professional codes of conduct for accountants and tax practitioners can generally be accessed through each state’s respective board of accountancy website. The National Association of State Boards of Accountancy provides contact information for each board. State laws and regulations can be accessed through each state’s respective website.

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