When it comes to choosing an accounting software for SMEs in India, one of the most critical decisions they will have to make is selecting the proper software. Accounting software will not only reduce the amount of manual work required, but it will also increase accuracy and support compliance with relevant laws. It will allow the SME to spend more time growing their business rather than completing accounting and compliance tasks. However, with dozens of available options (including both simple invoicing applications and complete Enterprise Resource Planning (ERP) solutions), how can a decision-maker select the accounting software that is best suited for their specific business needs? The guide below outlines the practical considerations Indian SMEs should consider when selecting accounting software, as well as how to maximise the benefit of accounting software through the combination of accounting software and outsourced accounting and bookkeeping services. 

1. Focus on your business needs before evaluating software features. 

Before considering any accounting software, a decision-maker should create a list of what his/her business actually requires. Some of the questions a business owner should consider include: 

• Which transactions will we process on a daily basis (sales, purchases, receipts and payments)? 
• Will we require GST ready invoicing, E-invoicing or TDS/TCS services? 
• How many users will be accessing the accounting system, and where from (office/remote)? 
• Does the company require inventory, manufacturing or multi-branch functionality? 
• What are the company’s reporting and MIS requirements for both management and tax purposes? 
• What will be the accounting volume and complexity on a monthly basis? 

An owner of a small service business that bills clients directly may have very different requirements from the owner of a retail store that tracks inventory and needs to comply with multi-location GST regulations.

2. The importance of prioritising compliance and Indian tax workflows.

Indian small and medium business enterprises (SMEs) must keep their books of accounts current, ensure that their Goods and Services Tax (GST) is being collected properly and submitted to the government when due, and meet all its  statutory reporting obligations (e.g. GSTR), as well as filing TDS on payments for services rendered by an individual or business, and e-Invoicing for a business with gross revenue of Rs One Crore or more.

Choosing software that:

• Is GST Compliant, and supports the preparation of GST Returns
• Collects and exports data to the GST Portal in the formats required
• Computes and issues TDS / TCS reports
• Produces and submits all Local Statutory Reporting formats

When your selected system understands the Indian Regulatory workflow, it will reduce the chance of non-compliance, which is critical to the criteria of selecting the right Accounting Service in Ahmedabad or any city in India.

3. Cloud vs. On-Premise

Today most SMEs have a strong preference for cloud-based accounting due to:

• Remote accessibility; the ability to work from anywhere is an advantage for remote staff and outsourced support.
• Automatic Software Updates; cloud-based software providers automatically push out all GST Regulatory Updates to their users.
• Reduced IT Cost; there are no server-related issues or management, backups, or maintenance to worry about.

While most Indian SMEs prefer to use cloud-based accounting with the support of reliable data backup services, many businesses with strict Data Residency policies or legacy integrations are opting for a traditional, on-premises solution.

4. Integrations and ecosystem fit

The accounting software you choose must be easily integrated with: 

• Banks to allow for automated reconciliation; 
• Payment Gateways & POS Systems; 
• CRM (Customer Relationship Management) systems and eCommerce Platforms; 
• Payroll/HR systems; 
• Excel/Google Sheets for export. 

Easy to use integrations reduce manual data entry errors. If you rely on digital channels (online orders, payment links), look for software that will integrate with those channels. 

5. Usability and onboarding

In terms of usability and onboarding, consider the following: 

• What does the UI look like? Is it intuitive enough for Accounting or Non-accounting staff to create invoices and support with capturing expenses
• Training resources – What type of onboarding, user guides, and videos does the vendor provide? 
• Local support – Does the vendor provide customer service in your country and in your language? 

If you plan to work with outside partners, like the top-rated accounting service providers in Ahmedabad or with an outsourced accounting firm, choose accounting software that they are already familiar with. It will help you onboard quickly and reduce costs.

6. Insights from reports, analytics, and management information

When searching for a good accounting software solution, keep in mind that it should provide you with more than only a way to record transactions; it should give you valuable insights into your business operations through various reports such as:

1. Cash flow forecasts and aged accounts receivable reports.
2. Profit and loss statements and balance sheets broken down by period, project, and/or branch.
3. GST summaries and taxation turnover reports needed for tax returns.
4. Custom-built reports that allow management to make informed decisions.

Dashboards showing your financial standing and printable or exportable reports will help you keep an eye on finances in one view.

7. Pricing and scalability

Select a software solution that grows with your business as it scales. When evaluating prices, consider future requirements and not just what you will need today (in terms of number of users and the features that are available).

• Is there a more expensive tier plan available for additional users, inventory, or multi-business accounting?
• Are there integrations available for payroll services, TDS compliance management, and payment gateway fees that are reasonably priced?
• Is the vendor providing you with clear pricing for renewal and for upgrade options?

The low-cost plan will ultimately be more costly and force you into migrating to a higher tier in 12 months.

8. Data ownership and security

• You should verify that your data is kept secure with encryption during data storage and when it is transmitted.
• Verify the availability of two-factor authentication and role-based access controls.
• Make sure that you have access to data backup and export options and that you always own your data.

Finally, if you outsource your accounting and bookkeeping, ensure that the vendor has effective access control mechanisms in place so you can restrict external accountant/outsourced accountant access to your data.

9. Combining Software with Services – The Benefits of Outsourcing Bookkeeping and Accounting Functions

While technology provides an array of tools, small and medium-sized businesses (SMEs) can benefit greatly from utilizing both a combination of tools and professional service providers. 

Outsource Accounting – Through a professional accountancy service, you can have your bookkeeping, tax compliance and management reports prepared for you monthly allowing you to focus entirely on the true operation of your business. Accountants that are familiar with local tax laws also speed up your compliance process and provide you with reliable advice.

Bookkeeping Assistance – If your business does not have the capacity nor the time to maintain accurate records, it is essential that you make use of an outside firm to assist you with your bookkeeping in order to ensure that your company’s accounting is up to date. The benefit of using a professional service to perform bookkeeping function, in addition to accurate bookkeeping, is the timely filing of returns and preparation of records in accordance with GST and Income tax.

When your company uses a cloud-based software solution, you can take advantage of the efficiencies provided through the ability to use a remote service provider for the performance of your essential accounting services, while your internal team captures their daily transactions, the outside service provides their perspectives on statutory returns and reporting. Be sure to look for a provider that has competence within your particular industry as well as the capability to integrate directly into your chosen accounting software to assure a successful transition.

Checklist for Final Decisions on Vendors

The following checklist will assist in evaluating vendors:

• Will the vendor’s solution manage India’s e-invoice, GST, and TDS?
• Is the vendor’s solution cloud based, and accessible at any time, and from anywhere?
• Will the vendor’s solution integrate with our POS, payroll, and e-commerce systems?
• Will the vendor’s solution have an intuitive UI for our staff who do not manage the books?
• Are data backup and storage supplies, data export ability, and security provisions sufficient?
• Can the vendor’s solution grow with the company without requiring the business to migrate to a new application?
• Does the vendor have local vendor support, or partner firms that provide outsourced bookkeeping and accounting support?
• Am I able to create my desired management reports from this vendor’s solution without needing extensive customizations?

To summarize, software plays an important role in business, but it is only as good as the processes and people who use it.

The best software for accounting will be dictated by your business’s size, complexity of transactions, regulatory obligations, and future growth plans. You need to choose an accounting software that gives you the right mix of a secure, tax compliant, and scalable platform to work from. Many small and mid-sized enterprises (SMEs) have found that by using cloud accounting and outsourcing their accounting functions to a partner, they can create an efficient accounting and reporting process. The cloud accounting software organizes the company’s books while their contractors (professional partners) ensure that they meet regulatory requirements and provide strategic commentary on their business operations.

If you would like to know how to choose and implement the best accounting software for your business, as well as learn about managed services, please do not hesitate to contact GJM & Co. GJM & Co offers all aspects of outsourced accounting, bookkeeping, tax compliance, payroll processing, and business advisory services. For further information, please contact us by telephone or email us at info@gjmco.com.