Every small business needs to have a properly formatted and configured accounting system, and to make that possible, professional accounting software is a must-have. Once you accept that it’s time to get beyond paper or just Excel spreadsheets, you need to choose the right software for your business.

In the U.S., this might not seem like much of a choice, with nearly 80% of American small businesses currently using some variant of QuickBooks. But in fact, more and more options are entering the marketplace all the time, and it’s critical for you to make the best decision for your business – regardless of what others choose.

Here are four key factors you should use in making the right choice:

1. Cloud vs. Desktop

One major decision is going to be cloud vs. desktop. In most other categories of business software, applications are rapidly moving to the cloud, which means that the applications themselves are web-based.

However, QuickBooks has traditionally been a desktop product, and the overwhelming majority of its customers have historically opted for the desktop software version.

Nonetheless, Quickbooks Online was launched in 2009 and has been growing every year since. It is essential to understand that QuickBooks Online is a completely different product than QuickBooks desktop — they only share the name because they are owned by the same company.

Many accountants strongly dislike QuickBooks Online because it has a much more limited feature set and many of them are not familiar with its configuration, but it is rapidly developing new capabilities and is worth serious consideration.

Two advantages of QuickBooks Online vs. the traditional desktop product are (a) you can access it literally anywhere, anytime via the web, and (b) your accountant can, too (no more having to export accountant-edition files to give your CPA an update).

If you want to keep the more comprehensive functionality of QuickBooks desktop edition but have remote access, you can opt to have it hosted in the cloud. This will give you the benefits of anytime, anywhere access to the most complete QuickBooks edition. The downside is that cloud hosting a desktop application, while powerful, is not the same as using a cloud-native product. For example, there may be limitations in the options, plugins and integrations you can use when you take this hybrid approach.

In addition, by opening your options up to include cloud-native solutions, you also position yourself to consider some of the best new small business accounting products on the market, including Xero, FreshBooks, Wave, KashFlow and Zoho Books among others. Many of these are recognized with awards for being easier to use, more streamlined and more owner-friendly…which means you might actually feel comfortable using your accounting software as a tool to help you grow your business.

2. Windows vs. Mac

If you go down the desktop route, then by far the leading option is probably QuickBooks…if you are on a Windows PC. QuickBooks Desktop for Windows comes in three editions — Pro, Premier and Enterprise – with the more robust options offering truly expansive capabilities for some highly complex industries and business requirements.

On the other hand, Mac is a totally different story. QuickBooks for Mac is a very limited, single-user desktop product, so Mac users will often look elsewhere for products that are built from the ground up for the Mac OS X environment.

The first solution is to purchase a Windows emulation product that allows you to run Windows on your Mac, then install the QuickBooks Desktop for Windows product and use it. As with cloud hosting, this gives you the benefit of using the most complete QuickBooks product available, even while you are on a Mac. However, there are technical limitations to what you can do with Windows “inside” your Mac, so — similar to cloud hosting — it is a hybrid solution with pros and cons.

If you opt to go the route of examining other Mac-native applications, two highly recognized options for Mac businesses include MYOB Accounting and AccountEdge.

Interestingly, many Mac products (including both MYOB and AccountEdge) are produced by non-U.S. software companies (particularly firms in the U.K., Canada, Australia and New Zealand), so you should be careful to ensure that the product will meet your requirements as a U.S. company.

3. Your Type of Business

It is also essential to consider the unique requirements of your industry or business type, when selecting the right solution. Case in point: the three QuickBooks Desktop editions vary largely on the basis of support for different industries.

If you run a contracting, manufacturing or wholesale business, then you may need to skip the cloud products and go with QuickBooks Desktop for Windows – Premier Edition, which has specific capabilities to support your industry. And if you have advanced inventory issues or numerous retail locations, you might need to go up to the Enterprise Edition.

And again, QuickBooks is not the only option for some industries. For example, if you run a small discrete manufacturing business, you might be an ideal candidate for Infor ERP Visual JobShop, which ties together core accounting functions with material resource planning (MRP) and scheduling of production processes and operations. Similarly, if you run a complex project-driven or government contracting business, you may need to consider jumping up products from Unanet or Deltek (especially if you need to be DCAA-compliant).

4. What Your Accountant Knows, Uses and Recommends

It is true that you shouldn’t limit yourself to just selecting accounting software on the basis of your accountant’s professional comfort zone…but if you do choose a product your accountant is not familiar with, you might find yourself experiencing unexpected strains in your relationship, or shopping unexpectedly for a new accountant.

Your accountant is an integral member of your team, and both you and he or she need to be on the same page. However, your choice of accountant today may not be the right choice to be your accountant tomorrow, so make sure you’re partnering with a firm or practitioner who knows your industry and who is staying current on accounting technology.

In addition, some online accounting and bookkeeping services —such as Bench and InDinero — now use or provide their own software. Again, make sure to see how these solutions might align with your accountant’s or CPA’s own in-house capabilities or expertise.

In the end, all of these factors come back to one essential priority: Choosing a technology solution based, first and foremost, on your business needs. What industry are you in? How centralized or spread out is your business? What unique needs or requirements should your chosen solution support?

By keeping these business priorities front-and-center, you will be well-positioned to choose the best accounting software solution for your business.

Image Credit: masaisrael (Flickr @ Creative Commons)