Choosing accounting software in South Africa

A ranking of accounting software tells you which product a reviewer preferred. It does not tell you whether the product prepares a VAT201, reads transactions from your bank or quotes a price you can compare with the next one. Those are the questions that decide whether accounting software works in South Africa, and they have right and wrong answers that you can check.

Work through the six below in order. Each one cuts the shortlist. By the end you should have two or three products to put through a real trial, and you will know what to test.

1. Are you registered for VAT?

VAT is charged at 15 percent. A business must register once its taxable turnover passes R1 million in any twelve month period, and may register voluntarily below that. If you are registered, you submit a VAT201 return to SARS for every tax period, and your software has to keep the books in a way that makes the return easy to produce and easy to defend.

If you are not registered, you can ignore VAT reporting for now, but check that the product lets you switch it on later without rebuilding your books. A business that grows past R1 million often has to register faster than it planned.

• Does the product prepare the VAT201 figures from your ledger?
• Can it move them into SARS eFiling, or does it only export a file?
• Does it handle both the invoice basis and the payments basis?
• Does it print a valid tax invoice? See what a valid tax invoice needs.

The register records VAT201 support only where the vendor's own page states it. The compliance matrix on the accounting sector page shows which products do. For the background, read VAT and the VAT201 return.

2. Does it read your bank?

A bank feed pulls your transactions in every day so that you reconcile instead of typing. It is the feature that saves the most hours, and the one where global products let South African businesses down most often, because feeds are built for American and British banks first.

The table counts the products whose own pages list a feed with each bank. Capitec and TymeBank are the two to check first if you bank with a newer bank. Read bank feeds, bank by bank, then ask the vendor to confirm the feed for your account type by name.

3. What does the price really cover?

Two prices are only comparable on the same footing. Some South African vendors quote with VAT included, some without, and some do not say. A business that is registered for VAT claims the VAT back, so the price excluding VAT is its real cost. A business that is not registered pays the price including VAT.

Then ask what the price is charged on. Accounting products are priced per organisation, per user or by a bundle of both. A plan that includes three users and one company is a different product from one that charges for each. Including and excluding VAT in a software price shows how to put them side by side.

4. How many users and companies?

Count the people who need to log in: you, a bookkeeper, an accountant who reviews the books each quarter, perhaps a salesperson who raises invoices. Then count the companies. A business owner with a trading company and a property company needs two sets of books, and some plans charge for each company.

• How many users does the plan include, and what does an extra user cost?
• Can your accountant log in without taking up a paid seat?
• How many companies does the plan include?
• What limits sit on the entry plan, such as invoices or bills a month?

5. Cloud, desktop, or both?

Most of the products on the register run in a browser. Sage describes Sage 50cloud Pastel as desktop accounting with cloud access. Cloud products need a connection to work. Desktop products need power and a backup routine. In a country with load shedding, neither is simply better, and the right answer depends on how you work. Read load shedding and business software before you decide.

6. What does leaving cost?

You will change systems at some point. Ask now what you can take with you. SARS expects you to keep your financial records for five years, so you need to be able to produce the history even after you stop paying. A product that only lets you export the current year, or that deletes your data the day you cancel, is expensive in a way the price does not show.

• In what formats can you export your ledger, customers, suppliers and stock?
• How long does the vendor keep your data after you cancel?
• Can you download every invoice as a PDF?

From six answers to a shortlist

1. Write down your answers to the six questions on one page, including your bank and whether you are registered for VAT.
2. Open the accounting sector page and use the compliance matrix to drop any product that does not state the VAT201 support you need.
3. Check the bank feed table for your bank and drop any product that does not list it.
4. Price the remaining products on the same footing, for your real number of users and companies.
5. Take the two or three that are left through a trial, using the five tests in how to test software in a free trial.