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Most often small business owners face the dilemma of having accounting software for small businesses. The major reason behind such preoccupation is not having enough knowledge concerning the value an accounting software could create in comparison to its cost of acquisition.
Traditional pen and paper-based accounting processes can be daunting and cumbersome for managing finances for small businesses especially, in an era of digitized world where we require lightning speed information to adapt to a rapidly changing environment. Today we have a wide array of accounting software for small businesses that are affordable, scalable and with little or no additional investment required for separate hardware installation.
In this article I am going to explain why small businesses need accounting software, benefits of accounting software for small businesses, list of small business accounting solutions, best accounting software options for small businesses.
Why Small Businesses Need Accounting Software
If you are a small business owner and you are considering bookkeeping automation but unsure, why would you invest in purchasing small business accounting software; I have outlined some key points that will convert your consideration into actual purchase decisions.
Value for Money
There are ranges of accounting software that are actually very cheap, even some are free. For example, wave, is an accounting software, will charge no money and it has great functionality and comes with most common accounting software features. For other accounting software that charges moderate to high rates depending on your business nature and transaction volume. However, a typical accounting software can charge you less than USD 100 a month on an average.
Choosing an accounting software can be really life-saving and outweighs the cost of acquisition. There have been several case studies conducted by Financfy that described how the accounting software handles all the complex business processes and helped the small business owner focus on other business issues. All the clients felt relieved and realized the investment was worth doing.
Efficiency & Productivity
Increase your business process efficiency by utilizing the accounting software advantages. It saves time by allowing automation of different accounting processes so that you can focus on other important stuff of your business.
Accounting/Bookkeeping software saves valuable time and increases productivity by integrating many important features. For example, Financfy provides customized chart of accounts; connect bank accounts and credit cards to your QuickBooks Online account; Recording Sales Transaction and Expenses; Manage Employees, Contractors & Taxes in a single integrated multifaceted platform so that you do more without moving around with different tools.
Accuracy
Accuracy is extremely crucial for managing finances for small businesses. If you are trying to attract new investors or cut a deal with a bank for a fresh loan or increase the line of credit with your financier, an accurate picture of your financial position, sales growth and profitability is very important. Besides, traditional pen-paper based pre-printed accounting books or excel based tools are error prone and could produce misleading information and unreliable as it cannot handle large datasets.
Therefore, accurate data of your business position and future prospects could not be achieved without a well functional accounting software for managing finances for small businesses or financial management of startups.
Business & Financial Reporting
Today’s business environment is highly competitive and ever changing. If you want to know your business position real-time or to adapt to any abrupt changes in the market forces or change in the business environment accounting software can give you leverage and agility over other small businesses who do not have accounting software in place by providing time reports.
On top of that integrated tax preparation software file tax returns can be made simple with accounting software compared to pen-paper based accounting and you may not have to trudge through a pile of documents for filing a tax return.
Most common accounting software provides 50 to 60 reports like Sales, Expense, Payroll, Profit & Loss Statement, Statement of Financial Position, Cash Flow Statement and so on. Software like QuickBooks Online can give you up to 70 reports.
Hardware Slack
Today’s accounting software mostly provides cloud accounting solutions and requires little space in your personal computer compared to earlier generations. This gives a sufficient impetus to small business owners to invest in purchasing accounting tools for small businesses. As you do require to manage separate servers, a huge cost is saved. All you need is a conventional computer with moderate configuration and internet and there you go!
When You know It’s Time To Get Accounting Software For Your Small Business
As business expands, operations become more intricate and time-consuming. You might start thinking about automating bookkeeping.
Here are key factors that push businesses to use accounting software:
1. Time consumed in Manual task are Abnormal
Managing sales, buy payroll and inventory can be time consuming and hectic. Hand written entries leaves them vulnerable to losses. It may get lost in unfortunate events. Furthermore, storing all paper-based books of a more be an extra burden. Accounting software is budget friendly. An integrated solution will give you ample time to focus on other important issues.
2. Too many tools clutter your attention
Handwritten entries may be chaotic. Looking into too many entries distracts attention and proper reporting becomes error-prone. To get rid of accounting software makes life easier. Revenue and expense tracking features will keep your focus on straight.
3. Difficulties Managing Customers/Vendors
Managing invoices for a growing customer base can become challenging. It becomes tough to track outstanding amounts from fulfilled orders. Accounting software offers a solution by including tools for managing accounts receivable/payable. This simplifies tracking of pending invoices.
4. Difficulties in Tax Filing
Tax filing could become a nightmare if you have a manual accounting system. Complexities arise for changes in rules and regulation. If not followed can bring out punishment or worse. Thus, accounting system that caters the tax preparation option can be a savior.
5. Difficulties in Financial Data Processing
The manual process is not efficient. It doesn’t boost the process and show you updated financial information. Economic conditions changes , you must adapt sales or inventory strategies. Record keeping tools of accounting software leaves space to analyze various customized reports. Decision making and reporting are easy.
Consideration before Purchasing Accounting Software for Your Small Business
What to keep in mind for buying accounting software features?
These are some the features –
1. General Ledgers: You can record sales, expenses, fixed assets, manage inventory, and liabilities
2. Invoicing: It must be able to match sales invoices. Then updates your accounts receivable and payable.
3. Inventory Control: Buying inventory adds to stock. Selling inventory decreases the stock vice-versa. You can check your available stock anytime.
4. Payroll: Generating an automated payroll calculation sheet with essential deductions.
5. Multi Company: The software has the option to record more than one business on the same platform.
6. Multi user: If you have more than one user the software should be able to cater access to more than one user.
7. Batch Entry: Batch transactions are per-formatted transactions. Export csv and txt file allows quick and faster traction recording.
8. Password Protection: To limit unauthorized access password protection options are very important.
9. Bank Reconciliation: There should be a bank account reconciliation option. It will allow you to check items in the bank statement.
10. Technical Support: Receiving technical support is crucial for addressing any system issues post-purchase. Thus selecting the one that has a robust technical support team.
Top Accounting Software for your Small Business:
- Financfy
- Zoho Books
- Patriot
- Quickbooks
- Freshbooks
- Xero
Final Thoughts
Having accounting software for your small business can be a life saver in many aspects. It streamlines your bookkeeping process, saves time for your reporting requirements. Enables ease in tax filing. It assists you in checking your bank balance, outstanding supplier payments, and customer dues. So you’re finally less worried and more focused on business.
