The process of running an enterprise of modest size, it takes work. Relying on manual processes and spreadsheets could make it more difficult to handle financials.
Modern online accounting solutions–such as Intuit QuickBooks, Xero, Zoho Books, FreshBooks, and many others, provide small businesses with the tools needed to automate routine accounting tasks, monitor invoices, and payments, and reconcile the books.
Based on the results of a survey that 50% of small-sized businesses stated that they do not use accounting software since “manual methods/spreadsheets have worked well for us.”
It surpasses other causes, such as the fact that they employ an accountant or bookkeeper from a third party for this purpose and need more time to be able to afford the or the time to research the available software options.
The data also highlights another important factor that is at play. Most small-sized businesses need more accounting experts on staff. Most of the time, particularly in small companies-the president or the owner is in charge of the company’s finances.
Most business owners do not have the accounting knowledge they need and overlook the advantages of using software for managing their finances.
Why Small Businesses Should Invest in Accounting Software and Expertise
When you’re using hand-written techniques and spreadsheets to manage your business’s finances, you’re likely to spend much of your time working on repetitive tasks that accounting software can automate.
You most likely need to look for and reconcile data from various sources as tax time comes around. Also likely, you need to receive accurate, current, and complete financial information that will help you make the most informed choices for your company.
Here are a few advantages that dedicated accounting software can bring to your company.
-
You are saving time
Online accounting software allows you to automate everyday tasks like issuing regular invoices, sending reminders for payments, and classifying expenses.
Some of these programs also offer tools to help automate tasks like processing payments such as payroll, processing payments and the management of inventory, managing contacts, and many others. By automating these repetitive tasks, you’ll be able to spend more time growing your business.
-
More accurate
Online accounting solutions offer features such as receipt capture and reconciliation with banks. The ability to capture information directly from where it came from aids in drastically reducing the risk of human error when manually inputting financial data into spreadsheets.
It also prevents the loss of data due to the absence of documents. Reconciliation of your bank account ensures that any difference between the balance on your account and your book balances will be flagged as a problem and corrected.
Captured receipts are saved online, making them easily accessible whenever you need to use them for tax purposes.
-
They are streamlining reporting
Accounting software also offers tools for reporting at your fingertips. All the most popular online accounting software companies offer basic reports, including balance sheets, cash flow, balance sheets, and income and balance statements.
They also offer other reports that can help with tax, payroll, monitoring time, etc. The reports help assess a business’s performance across multiple areas and make adjustments as needed.
-
A lesser amount of stress when it comes to tax time
Instead of manually pulling together receipts, spreadsheets, bank statements, and other information on paper, you’ll be able to access all of the required data in one location.
Accounting software is based on rules and can ensure you comply with applicable tax regulations and apply the right taxes on different activities throughout the calendar year. Reporting tools can create tax summary reports at any point to keep you in control of your finances and prepare to tax season.
Remember, you can spend a reasonable amount on accounting software for small businesses. Each user typically costs less than $20 per month, and some companies provide free versions.
-
Perspective
The U.S. Small Business Administration reports that approximately one-in-five businesses fail within the first year. Around half of them survive for five years or more, and about one-third reach the 10-year mark.
Problems with cash flow are the most common cause of business failures. According to a study by U.S. Bank, they are responsible for 82% of small business closings. Other reasons are not being able to draw enough customers (42 percent) and being short of cash (29 percent), as well as having not invested enough into human capital (23 percent) and being pushed out by rivals (19 percent).
These numbers confirm that having a clear overview of financial information is essential to ensure the viability of your business and expansion. Accounting software specifically designed for accounting can help you keep your finances in order and help you handle essential tasks like invoicing expenditures, payments, and invoicing better than spreadsheets the pen.
Simplify tax filing and allow you to easily access the information you need to help guide your business in the right direction. Alongside these fundamentals, accounting software will help you manage the inventory of your business and reconcile bank accounts.
