Accounting software: what a small business actually needs from it

Accounting software has one job that outranks every other: producing numbers you and your accountant both trust, on the day you need them. Everything else — receipt scanning, dashboards, forecasting — is convenience layered on top of that, and none of it helps if the ledger underneath is a guess.

That is why the useful comparison is short. Most small businesses need six things, and the rest of the feature grid is noise until those six are covered.

The six things accounting software has to do

• Double entry. Every transaction hits two accounts. It is what makes the books balance and what makes errors findable, and a tool without it is a spending diary.
• A chart of accounts you can shape. Your accountant has an opinion about this, and adapting to their structure beats making them adapt to yours.
• Bank reconciliation. Matching statements to entries is where mistakes surface — missing invoices, duplicate charges, transfers booked twice.
• Reports that are actually the standard ones: profit and loss, balance sheet, and a general ledger you can hand over without explanation.
• Accountant access. Read or full, with a way to grant it without sharing your login.
• Export. P&L, balance sheet and ledgers as PDF, CSV or XLS, plus your raw transactions. The exit path is a feature.

The question that separates real bookkeeping from expense tracking: can it show you the balance sheet? If the tool only reports money in and money out, it cannot tell you what the business owns and owes — which is the half that matters when you need credit, a valuation, or a tax return.

What your accountant will ask for

Three things, usually: a trial balance, a general ledger for the period, and the bank reconciliations. If your software can produce those on demand, year-end is a short conversation. If it cannot, you will pay someone to rebuild them from statements, which is the most expensive way to do bookkeeping.

It is worth asking your accountant which format they prefer before you commit. A tool they already know saves both of you hours, and a clean CSV export makes almost any tool workable.

Switching without losing your history

1. Pick a cutover date, normally the start of a financial period. Mid-period migrations double the reconciliation work.
2. Export everything from the old system first — transactions, chart of accounts, and the reports for closed periods. Keep them even after the migration; closed periods should never need re-deriving.
3. Enter opening balances as at the cutover date, and reconcile them against the last statement before you record anything new.
4. Import bank statements as CSV or OFX rather than retyping, and set categorisation rules once so recurring transactions sort themselves.
5. Set up recurring entries — rent, salaries, subscriptions — so nothing is forgotten in a busy month.
6. Run the first month in parallel if the numbers are material, and compare the P&L from both systems before you switch off the old one.

Ettex Books is built to that specification: a chart of accounts structured the way accountants expect, double-entry transactions with full debit and credit control on manual journal entries, categories and auto-categorisation rules, bank reconciliation to match statements against the books, bank statement import from CSV or OFX, recurring entries, multi-currency with rate tracking, notes and documents attached to any entry, instant search across all periods, and P&L, balance sheet and ledger export as PDF, CSV or XLS. Your accountant can be invited with read or full access. The books are local-first, so they stay on your device and remain available offline.

Traps worth avoiding

• Categorising everything as "miscellaneous" because the right category does not exist yet. Add the category — future you is the one reading the report.
• Recording invoices only when they are paid. Cash timing and revenue timing are different questions, and mixing them hides both.
• Skipping reconciliation for a few months. The discrepancy is always there; you just find it later, when the trail is colder.
• Keeping the business account and the personal account entangled. Separating them is the single highest-value bookkeeping habit there is.
• Choosing a tool your accountant cannot get data out of, and paying for that decision every January.

Judge accounting software on whether it makes reconciliation routine and the standard reports one click away. Those two habits are the whole of good bookkeeping; the rest is preference.