Let’s admit it! Maintaining financial records and bookkeeping is tedious and time-consuming. If you are just starting out a business, it may seem even more intimidating. Around 40% of small business owners said that bookkeeping and taxes put pressure on their business .
Today, there are different types of small business accounting software that simplify bookkeeping. Besides, these solutions also make it considerably easier to create business plants by evaluating your past executive decisions.
Businesses of all shapes and sizes can reap the benefits of an accounting software. While most of the accounting software solutions come with basic accounting features such as general ledgers and bank reconciliation statements, new-age tools come with some robust set of features.
Let’s take a look at why small businesses need an accounting software and how it can benefit them.
Why use an accounting software for your small business?
Accounting software comes with a host of features that do so much more than basic accounting. Some of these top features include in-built payroll services, automatic invoice generation, and more.
As a small business owner, you may wonder whether you need an accounting software. The answer to that question is Yes. Regardless of the size of your company, an accounting tool takes the load off your shoulders as far as accounting is concerned. This allows you to focus on other important tasks.
As a business owner, you should be continually looking for ways to make your processes more efficient. This primarily stands true for administrative tasks that prevent you from expanding your businesses.
Once you get a hang of an accounting software, you will be able to manage your books efficiently in a short period of time.
A plethora of accounting tools enables you to accelerate your bookkeeping efforts in just a few steps. If you opt for a cloud accounting software, you can go about your accounting tasks from any location in the world as long as you have a stable internet connection.
An accounting software ensures that all the key information is stored in a single location, making it easy to keep track of past transactions. This eliminates the need to go through piles of paper and different spreadsheets.
2. Accounting automation
Automation makes your accounting a lot easier. Based on the accounting software you choose for your business, you can compile statements, generate invoices, and add totals automatically.
Automated figures ensure that you do not have to calculate your totals manually. In addition, automatic totals are far more accurate than figures calculated manually. There is very little room for error when a computer calculates expense totals and income for you. You will also have a clear understanding of your business’s bottom line.
3. Streamlined tax filing
When your records are disorganized, it can cause a world of confusion while filing taxes. If you are still sending over boxes of receipts to your accountant, it is probably a good idea to purchase a basic accounting software package for your small business.
Misrepresented or incorrect data is an open invitation to heavy fines, penalties, and even legal action against you.
Remember that even if your returns get the green signal from the IRS, disorganized accounting books can still cost you. If you are paying your accountant or tax expert on an hourly basis, you will have to pay for extra hours.
An accounting tool ensures that your business transactions are organized. Besides, you will even make it easier for your accountant to access your books, taking away the burden of dealing with a lot of paperwork.
4. You are audit ready
When your accounting records are well maintained and free from errors, you do not have to worry about an expected audit. In most cases, auditors will predominantly verify if your books have the right information. If there are inconsistencies in your books, you will have to pay a fine or a penalty.
When you maintain your records manually, it increases the chances of making errors. When your records are riddled with errors, there is a higher chance that you will be audited.
An accounting software will help you keep IRS audit red flags at bay, allowing you to look away from audits.
In case you audited, an accounting software ensures that you look organized and more professional. In most cases, audits are relatively shorter for companies that maintain formal records instead of hand-recorded books.
5. Clarity on your business’s history
An accounting software for your small business enables you to set realistic goals and expectations. Business leaders can view their past transactions and financial history to track the progress made and plan for the future.
When you have a clear idea of your expense patterns, you can create achievable goals. For example, if you want to increase your turnover by 10%, you can go through your past records in the accounting software to understand what you need to do to achieve your target.
Besides, when you go through your past records, you can plan your cash flow effectively. An accounting software for your small business also enables you to create a budget for your business and make informed decisions.
Accounting is not everyone’s cup of tea. Having said that is not entirely a bad thing. The best way to stay clear from trouble and discrepancies is to use a financial accounting tool.
However, before you choose a software, you should evaluate the pros and cons of each tool. You can go through our detailed tool reviews to evaluate the benefits of different financial reporting tools to choose the right tool for your business.
Many vendors offer a free trial which allows you to try and test all the features before you make a decision.
There is no doubt that an accounting software offers tons of benefits, which is why it is a good idea to invest in one if you haven’t already.