Accounting software is one of those pesky items that companies seem to upgrade every year. You buy the latest version and a year later the accounting software company starts harassing you about upgrading to a newer version. On top of it all, they want you to pay for the upgrade. This article will help business owners decide when it’s time to upgrade.
The truth is, in most cases, you don’t need to upgrade your business accounting software every year; contrary to what your software provider may be telling you. This idea of needing to upgrade every year comes from tax accounting. The truth is that tax accounting laws change every year and so the software associated with tax changes every year. However, accounting does not equal tax no matter what misconceptions you have been told over the years.
Accounting is tracking financial information (usually transactions like sales and purchases) and using that information to make decisions. Yes, it is true that you use the information for tax purposes, but if that’s all you use it for, then your business is missing out on opportunities to become more profitable.
It has been my experience that many smaller businesses will upgrade their accounting software very three to five years. Here’s why they do it:
The payroll portion of their software is outdated. A lot of business software providers will try to scare you into upgrading claiming that the deductions and withholdings information on your payroll module are outdated. They will often make you buy the payroll module on a monthly basis so that you get an “updated” version every year. While this isn’t a horrible plan (payroll laws change quite frequently), it isn’t always necessary. In many cases, your old software will do just as good of a job as your new software. Check to see when the last time you are local or state employee laws changed. If it’s usually five years between law changes, then no need to waste the money on an upgrade.
Another reason accounting software for businesses is updated because the old system’s database is full and the system is running slowly. After a certain amount of information is packed into the database, it can slow down. business owners will often upgrade to avoid this problem. Before purchasing business accounting software, check to make sure the database will work for your company for years to come.
The last reason many owners upgrade is that the accounting software lacks a certain feature. Sometimes managers will want data sharing through the Internet, and that will require an upgrade. Also sometimes managers will want a software package that can create certain reports and they upgrade to a system that will provide them these reports. A great example is my own business, wherein I’d been a dedicated fan of pavin the way.com since the beginning. Over the years I came to realize that the fulls suite of features I needed just wasn’t there, so I switched!
Next time the latest edition of your accounting software is released, you might consider putting on the brakes before rushing out to purchase it. Make sure it has a new feature that your business
will need before wasting your valuable resources.