Having a small business isn’t all about making money. You also must make sure that your money is well managed. If finance and accounting aren’t your strong suit, you might benefit from using accounting software to organize the major money functions of your business. The owners of several other businesses feel similarly with the global accounting software market expected to reach $11.8 billion by 2026.
You can rely on the accounting software to execute the services that you’d probably seek from a bookkeeper or certified public accountant (CPA) to handle. Even if you take care of several money-related matters for your business on your own, or with the help of your staff, accounting software can be beneficial. If you find your business is growing or changing in any way, accounting software can help ensure that these transitions occur with few to no financial errors.
Key Takeaways
- Accounting software for small businesses cuts down on redundant data entry, saves you a lot of time as a business owner, and helps you to keep more accurate records.
- Accounting software automates monotonous manual tasks and organizes data that allows you to pull up documents including profit, expenses, and cash flow quickly because they are all saved and backed up in a single source.
- Businesses are susceptible to penalties of up to 20% for inaccurately filed taxes, accounting software is a big help if you’re an expert in your field but aren’t adept at financial literacy.
What Are the Benefits of Using Accounting Software?
Some of the primary benefits of using accounting software for small businesses are that it cuts down on redundant data entry, saves you a lot of time as a business owner, and helps you to keep more accurate records.
Certain industries, such as construction, manufacturing, and wholesale distributors, have their own brands of accounting software that are specific to those industries. However, more general small businesses should feel comfortable using more standard accounting software that can be used across different industries.
What Are Some Tasks That Can Be Done With Accounting Software?
- Inventory management
- Sales tracking
- Managing customer contacts
- Merchant account support
- Budgeting
- Estimates
- Payroll
- Business tax reporting
When Is It Time To Switch To Accounting Software?
- You’re experiencing growth in your business
- You require faster access to information
- Your administrative tasks are boring and repetitive
- You’re experiencing an increase in manual errors
- You lack technical accounting skills
- You’ve been advised to switch
If you haven’t already been using accounting software, then you have likely hit a wall or challenge within your business that has made you consider utilizing accounting software. If any of these issues have come up within your business, it might be a good indication that it’s time to upgrade from manual bookkeeping to accounting software.
You’re Experiencing Growth in Your Business
If your business is growing it might only be a matter of time before you can no longer handle the financial side of things manually, such as budgets and invoices. It’s better to get ahead of the curve and introduce accounting software before you become overwhelmed. This might also be a good stage to consider hiring an accountant or putting a staff member in charge of finances if you’re not overseeing these tasks.
You Require Faster Access to Information
You’ve gotten to a point where your business simply has too much data. An accounting software program can save and organize that data and allow you to pull up data at will whenever it’s required. Documents including profit, expenses, and cash flow can be pulled up quickly because they are all saved and backed up in a single source.
Your Administrative Tasks Are Boring and Repetitive
Accounting software automates much of the monotonous manual tasks that come with staying on top of business finances, including inventory tracking, processing transactions, and invoicing.
Again, these aspects of the job might not be so bad early in the business when the customer base is small. However, as the business starts to grow these accounting tasks can become more tedious.
You’re Experiencing an Increase in Manual Errors
Accounting software can catch input errors where you might not be able to when working on a manual spreadsheet. Fewer errors in your accounting will make for a more efficient business overall.
You Lack Technical Accounting Skills
Accounting software can be a big help for you if you’re an expert in your field but aren’t adept at financial literacy. Not having proper knowledge of accounting and bookkeeping is something that can ultimately cost you your business if you aren’t careful. Accounting software can give you that leverage to become financially astute and keep your business thriving.
You’ve Been Advised to Switch
If you’ve had an expert, such as an accountant, or even the IRS recommend that you invest in accounting software, that’s a good sign that you should consider a switch. If you work with an accounting firm, it could very well be that they don’t want the job of processing all your paperwork. However, businesses are susceptible to penalties of up to 20% for inaccurately filed taxes. Again, accounting software can help you catch errors and save money.
What Are the Top 5 Accounting Software Services?
- Zoho Books
- Patriot
- Quickbooks
- Freshbooks
- Xero
Zoho Books
Pros
- Great record and transaction forms
Cons
- No fixed assets management
Price:
- $9/month Basic
- $19/month Standard
- $29/month Pro
Patriot
Pros
- Feature-rich accounting software
Cons
- Support not available 24/7
Price:
- $15/month
QuickBooks
Pros
- Third-party integrations are simple to implement
Cons
- No tax management tools
Price:
- $12/month Simple start
- $20/month Essentials
- $35/month Plus
- $75/month Advance
FreshBooks
Pros
- Supports double-entry accounting
Cons
- Doesn’t produce quarterly tax estimates
Price:
- $4.50/month Lite
- $7.60/month Plus
- $15/month Premium
Xero
Pros
- Advanced reconciliation tools
Cons
- No phone or chat help
Price:
- $20/month Starter
- $30/month Standard
- $40/month Premium
Frequently Asked Questions (FAQs)
Here are some things you should consider when shopping for an accounting software service.
Who Should You Talk To About Switching to Accounting Software?
You should discuss any major changes in the operations of your business with your staff, foremost. They will likely also be affected by the switch and might be able to bring some perspective and suggestions for software and services that you might not have considered. Additionally, you want to notify your accountant of your switch to accounting software so they can make the necessary changes on their end to tasks, such as how they prepare your taxes.
Does Your Bank Support Accounting Software?
Should You Get an Online Service or Installed Software?
Can Access Be Restricted for Some Users?
Does the Accounting Software Come With a Free Trial?
Knowing whether your accounting software comes with a free trial and how long the trial is also highly beneficial. Depending on the brand, many free trials will be between seven days and 30 days.Overall, being able to test the service before committing to buying it might allow you to try different types of software to see which would be best for your business.
What To Do Next
Introducing accounting software to your small business can be a major step toward positive change. Whether you’re adjusting amid expansion or working to correct pitfalls in your financial strategy, embracing ways to make your job easier is typically a good thing. Choose carefully the best accounting software that will handle all of the critical data of your business finances, it is a wise investment that guarantees a stress-free financial and legal standing for your business.