7 Reasons Why Your Small Business Needs Accounting Software
It’s not unusual for small businesses to encounter certain challenges with respect to financial record-keeping. Many entrepreneurs, regardless of the present-day solutions for modern business operations, rely on conventional books and simple computerized recording systems to be able to keep track of their expenses, returns, profits, revenues and other information related to their money in the business.
In many cases, start ups and small business owners are not exactly keen about embracing new technology to their enterprise. The fear that comes with failing to keep up or adopt the new, more advanced structures for purported ease in the many aspects of doing business may get the best of them. Add those to the fact that the costs associated with putting up an entire new system often proposes to be a great obstacle.
Overcoming such fear of failure, according to experts, takes an open mind and a careful evaluation of the effects that new technologies embraced have on similarly situated ventures that dared integration of the terrifying innovation. Clearly, technologies can be crucial to enterprises – regardless of their size – and offer more than just simple help. In fact, many software and programs these days are able to introduce a whole new structure that eases an entire aspect of the business operation.
Refusing to accept systems to enact change and keep up with modern technology can paralyze the small business – just as disregarding the need to assess can mean missing out on the benefits.
Bonnie Lee, owner of Taxpertise in Sonoma, California, says welcoming technology, particularly to streamline accounting systems in an enterprise, is imperative these days.When the tax season arrives, the program can help get rid of piles after piles of paper detailing the financial statements and their attachments, often presented in spreadsheet. They may have taken days and weeks to compile and record, and in most cases, are not exactly 100% error-free.
“I encourage all serious business owners to keep their books on computerized accounting software. Aside from completeness of data, there are other good reasons to track your business’ financial transactions using accounting software,” Lee said in an article posted on Fox Small Business Center, citing these specific benefits:
Bank reconciliation made simple. You don’t miss deductions when you reconcile your bank account on computerized software. The account won’t balance if you don’t post the bank charges or the missing receipt for that debit card transaction at the office supply store.
Easy input. If you don’t like keyboarding in your transactions, most banks will allow for a direct download of your bank account data. With a few keystrokes, you can enter an entire month’s worth of transactions. Tracking credit cards used in the business can be simple and you will remember to post the finance charges.
Formalized financial statements. A computerized accounting software program can provide profit and loss statements and balance sheets that are necessary to evaluate your business’ progress. If you are seeking financing for your business, you must present investors with financial statements.
History of the business. There is nothing more educational and satisfying then bringing down a comparative income statement to compare your current year activity with prior year(s). A spreadsheet program can give you this as well, but the data entry is clumsy and more prone to inaccuracies.
Customer history and aging. Using a software’s invoicing feature allows you to track your customers’ purchasing history and payment habits. Aging reports can be generated to facilitate collection efforts.
Vendor history and aging. Rather than simply cutting checks when bills are due, you can use the accounts payable system to track bills as they arrive and plan for cash flow. Using software will also provide you with reports for each vendor. It makes it easy to locate prior payments and invoices.
Audit-proof the books. Whenever I’ve dealt with IRS auditors and the agent sees that the books have been kept on a formalized accounting software, especially by a professional bookkeeping service, the audit tends to be short.
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