One thing that most business owners have in common is that they like to save money by doing things themselves. One such way in which you can save money is by using small business accounting software.
Accounting software has undergone quite a revolution and they are now mostly cloud based. Vendors of accounting software offer online services based on subscription model which ranges from basic to advanced which vary in functionality and price.
Let us take a look at the benefits of using accounting software:
For an amount as low as £8 sole proprietorships and freelancers can put an accounting software to good use and avail basic features such as expense tracking, invoicing and simple reporting.
Businesses which do not qualify as a small business and/or have employees may not find the £8 variant of accounting software packages sufficient for their needs and may have to opt for advanced packages such as those offered by Sage 50 and QuickBooks. These software packages are capable of double entry accounting which includes accounts payable, accounts receivable and general ledger capabilities.
Other features which are usually offered as part of packages which are more advanced include multi-user access, payroll, time and billing, currency conversion, customer relationship management (CRM), inventory tracking, analytics, and more.
Irrespective of what your specific requirements are, making use of accounting software is akin to striking a balance between using spreadsheets to do your own accounting and hiring a professional or outsourcing the task of accounting to a third party. Besides being cost-effective, there are several other advantages of using small business accounting software.
Whether you are a one person consultancy wherein you are required to personally enter your transactions on a bi-weekly basis or you are running a retail operation where making entries is not your concern as it is electronically entered, a small business accounting software keeps you on your toes with regards to making regular data entries and keeping records updated.
An added benefit of maintaining regular records is that you are aware of the financial wellbeing of your small business. As you are tuned into your business’s financial pulse, you stand a better chance to identify cash flow inconsistencies before they get out of hand.
When you deal with the invoices and receipts at the end of a financial quarter, you can hardly take corrective actions before the problem gets bigger, such as identifying the customer who is developing a serious credit problem.
Software has evolved from being an offline utility to becoming a convenient and easy-to-access cloud service. Similarly, accounting software also offer the advantage of accessing your business accounts from any location. These software packages support majority of the web browsers along with having dedicated Android and iPhone/iPad applications. They can be used to:
- View expense, client details or invoice information.
- Send invoices directly from mobile devices.
- Attach receipts and record expenses immediately by clicking pictures of receipts such as a dinner tab with a client and add it to expenses.
- A built-in timer is provided to track billable time.
- Using your phone contact information you can directly import a new client.
Another money and time-saving advantage of cloud based accounting software is its ability to provide direct access of your books to your accountant through the online application. It saves a lot of effort as you are not required to transfer electronic or paper files each time your accountant needs them.
Many aspects of your business’s financial management become centralised by the use of an accounting software. You only need to use one software program to deal with tasks such as invoicing, inventory management, certain aspects of customer relationship management and payroll.
In this manner, centralisation saves a lot of your money and time which would have otherwise been spent to purchase separate software programs to perform different tasks. Also, as your accounting task becomes simpler to manage, you are left with a lot of time in your hands to aggressively growth opportunities for your business.
Simplifies Tax Compliance
As tax returns need to be filed in the digital format, these accounting software packages can prove to be extremely helpful. Not only do these applications show how much tax is payable on invoices but they also allow you to prepare reports which show how much of a particular tax has been paid by your business over a certain time period. Some accounting software packages also allow you to directly file tax returns to the HMRC.
Having good business accounting software is almost as good as having an in-house financial advisor. With the help of accounting software, it is possible to analyse different aspects related to the finances of your business. The data which is needed to make better financial decisions can be easily obtained from these software applications.
Summaries of balance sheet will reveal the figures which shed light on the overall performance of your business. It will also allow you to easily manage your accounts receivable by letting you know the extent of debt that each customer owes to the business.
When you use an accounting software program, you are not required to perform the complicated calculations which is an integral part of an accounting job. As it is not you but a software which is performing these calculations, they are bound to be more accurate.
In the absence of an accounting software, the possibility of your data being inaccurate increases as there are multiple people entering data into the system. Thus, accessing and providing accurate information becomes a lot easier with the use of accounting software. Whether it is the mailing address of a supplier that you need or payment details of a particular customer, accounting software makes retrieving such information seem extremely convenient and simple.
Besides the benefits which are mentioned above, there is another advantage of using accounting software which is data security. Not only is your data safe and secure from potential threats, it is also an efficient solution to counter the common problem of data loss as it is cloud based.