As an independent contractor, it’s as important for you to manage your accounting as it is for any other business, and the right accounting software is a crucial factor in doing so.  It can be a large investment and there are a great number of options, so how do you select the software that fits your needs and matches your budget? If accounting is far from your specialty, deciding on the right one may come as an even bigger challenge.

FreshBooks recently published a blog post by guest author Adam Bluemmer, the Managing Editor for Find Accounting Software.  Withn it, Bluemmer describes four key steps to help you weigh your options.  We found the process so helpful, we decided to share it with our readers:

Step 1: define your requirements

It’s easy to be overly influenced by an immediate issue when seeking new software.  Pause for a moment to consider other issues that may have arisen since the last time you bought software.  Making a great software decision depends on factoring in these considerations.

To expand the scope of your needs, try brainstorming lists and sketching out simple process maps. These are time-tested project management techniques that can help you easily outline your requirements without the input of numerous people.

Step 2: identify your options

Once you’ve developed a solid set of requirements for your business, you’re ready to begin researching software. Here are 3 research techniques, each with their own pros and cons:

Recommendations from colleagues and family

• Pro: a recommendation from a close source increases the chances that you are going to get an unbiased, accurate opinion

• Con: the source may have limited product knowledge and thus, is unable to assess whether or not a software suits your needs

• Best practice: try to find someone who works at a business with needs similar to yours

Independent online research

• Pro: searching reviews, product sites and user forums will provide you with many software options

• Con: online research can be tedious. It’s easy to spend a lot of time reviewing software, only to find it doesn’t meet your fundamental requirements

• Best practice: once you’ve located the websites of a few products you’re interested in, use a search engine like Google to refine your key needs

Third party software matching services

• Pro: using a third party matching service, which offers recommendations of software to businesses, provides a quick and accurate match for your needs

• Con: some services have costs or obligations

• Best practice: when talking to someone from the service, verify that you can choose the number of product referrals and ask specifically how recommendations are determined

Step 3: evaluate your choices

Evaluate your choices by asking each potential software provider how their program meets your needs.  This should immediately disqualify a number of options. Once you’ve narrowed your pool down to 2-3 choices, you should then:

• Demo the software before investing or signing any contracts

• Use social media and online forums to find product reviews, if you haven’t already

Step 4: make a cost-conscious decision

This means you should be conscious of all the costs, rather than just the purchase price. Potential software costs to consider include:

• Licensing

• Support

• Version updates

• Hosting

With many software solutions, especially SaaS or “software as a service” choices, these costs are bundled together. Cost savings need to be considered, as well.

Which accounting software are you using to manage your business?  Are you even using one?

FreshBooks is the #1 cloud accounting solution designed for small business owners. They help everyone from the most fragile of businesses (many of them one person, first time owners) to the most vibrant businesses, collecting billions of dollars. FreshBooks is designed for service-based businesses. They uphold a longstanding tradition of providing extraordinary customer service and building a product that helps save customers time, pursue their passion and serve their customers.