Although it's possible to run a small business without accounting software, this approach is more time-intensive and error-prone. For example, spreadsheets typically don't update in real-time and can't be used to automatically reconcile lots of payments across multiple bank accounts, but accounting software does! It can save businesses up to five hours of week typically spent on admin. Accounting software also enables effective collaboration with other people in the business or with an accountant.

The software needs of a business vary depending on its size, industry and requirements.

For example, a micro-business may need project management software, like Trello or Asana, for managing projects with contractors. They may also use file storage software like Dropbox and Google Drive to manage and store files securely.

A business who accepts payments from customers may use a payments portal like Paypal or Stripe.

Similarly, a business with several dozen employees may use HR software, like Sage HR, to manage people across the business. They may also use software like Sage Payroll to pay employees quickly and accurately. Most growing businesses use some form of accounting software, like Sage Accounting, so they can manage the books more efficiently.

Accountants use software that can help them collaborate with clients and or submit tax returns on their behalf. Sage Accounting is an example of accounting software popular with Canadian accountants who work with small businesses. It's a more modern solution than Sage 50cloud, which is also popular.

Accountants also use accounts production software for running their practice and payroll software for paying people they employ.

If a practice supports a larger business, they may use an advanced financial management solution like Sage Intacct.

Ideally, online financial software for small businesses should solve a particular problem.

For example, if Jane struggles to keep track of all the items on her to-do list, she should consider investing in project management software to keep track of multiple projects. Similarly, time-tracking software is sometimes useful for billing.

If Jane works with people remotely, she may find software like Slack and Dropbox useful for collaboration.

Similarly, if Jane spends several hours a week examining profit and loss spreadsheets and reconciling bank transactions, she may be spending her time ineffectively.

Although understanding profit and loss is important for business owners, Jane's time is probably better spent growing the business by serving customers or creating better products. In this case, accounting software should free up several hours in Jane's week that she can spend on higher-value activities.