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Transaction Pro Blog

7 Reasons Your Small Business Should Use Accounting Software

Small businesses play a crucial role in driving the growth of any economy. In the United States, there are over 30 million small businesses operating in 2018. The Small Business Administration (SBA) cited in their 2018 SMB statistics report that the small business sector is responsible for 99% of all businesses in the nation and accounts for 54% of all sales in the US.

There is no denying that small businesses will continue to be prevalent in the coming years. The steady increase of small businesses and startups can be attributed to a number of factors, primarily the advent of innovative business tools and systems such as accounting software.

Are you running a small business or do you plan to own one? If so, getting accounting software is a must. The advantages of accounting software include a myriad of benefits, from simplifying your tasks to helping you gather insights that will push your enterprise further toward your goals.

 

  1. Streamline Your Accounting Processes

The need for accounting software is becoming more and more obvious. Accounting processes need to not only be accurate; they need to be extremely fast if your business is to operate at a very competitive pace.

The automation of various financial aspects of your business, such as reconciliation of transactions, bookkeeping, payroll, expense management, financial reporting, and taxes, among others, means that you don’t have to dedicate a valuable amount of time to these processes.

Doing all these processes manually involves hours, if not days. A good accounting software saves you time that you can utilize on other important matters, thus making you more efficient and productive.

 

  1. Save Money and Other Resources

When you save time, you also save money. In the case of small businesses, time is a valuable resource. And if you don’t waste time on exhaustive and repetitive accounting processes, then you are saving money and resources that you can spend on something else entirely.

Of 5,000 SMB business decision-makers who participated in a 2017 SMB accounting survey, 18% admitted that they do not use accounting software. A few business operators would hire an accounting firm or a certified accountant to crunch the numbers for them. But such practice, while convenient and time-effective, can be quite expensive and take a huge chunk out of their business budget.

Purchasing accounting software will not only speed things up for them, but they also spend significantly less and still get the same results, if not better.

 

  1. Reduce Accounting Errors

Speeding up your accounting processes and keeping them all precise is one of the many accounting software benefits. Your accounting software accelerates your processes and automates time-consuming tasks such as calculating financial transactions and generating cash flow reports. It minimizes human intervention, effectively decreasing the risk of errors in your accounting processes.

Erroneous accounting can adversely impact your business. Miscalculations can lead to the wrong expense projections and the creation and implementation of flawed budget plans. Mistakes in your financial reports can hamper your credibility and may result in non-compliance and violations of tax laws and policies. In addition to having the right accounting tool to automate workflows, integrating with third-party apps also reduces potential errors when transferring data.

 

  1. Help Eliminate Accounting Fraud

In an old, conventional setup, most accounting functions in a small business are left to the hands of two or three individuals. Such an arrangement puts your business at risk for fraud, especially when done manually since there is no transparency.

Almost all types of accounting software, if not all, allow you and other parties to access your financial information from a desktop, laptop, and mobile device while maintaining security. That means you can track all processes, generate audit trail reports in seconds, and be notified of changes in real-time.  

With an accounting system deployed to automate accounting functions, there is less need for human involvement. When human intervention is minimized to a significant extent, there is less for fraudulent manipulation.

 

  1. Integrate Accounting, Expenses, and Invoicing

Employing disparate software solutions for accounting, expense management, and invoicing is an impractical and unproductive practice. Why deploy three or more different platforms when you can have an integrated accounting software do all things for you?

A survey on emerging trends among SMBs revealed that 52.9% of small and medium-sized businesses in the United States believe that having a singular system for accounting, payments, and invoicing is crucial to the growth of their business. And it makes sense. Operating a single software to handle three or more aspects of your business is more practical than using multiple platforms.

The good news is that many accounting software platforms feature a plethora of capabilities such as invoicing, expense management, cash flow monitoring, auditing, tax automation, and financial reporting and analysis.

 

  1. Create and Implement Viable Budget Plans

With accounting software, you can effectively and closely track your expenses, monitor (and follow up) your receivables, and settle your payables promptly. Accounting software also provides you with actionable insights into your finances, enabling you to generate accurate financial projections. These projections then allow you to create feasible budget plans.

Being aware of the financial health of your business and being able to predict its financial status in the foreseeable future helps you to map out your expenses as well as create and execute effective business strategies, especially those that involve spending (payroll, utilities, and rent) and acquisitions (purchase of assets and equipment).

 

  1. Comply With The Law and Other Policies

Operating a small business entails total compliance to prevailing laws, regulations, industry policies, and so on. Non-adherence to laws and regulations can result in heavy penalties, warnings, temporary or permanent closure of your business, or worse, imprisonment.

So how does accounting software help you with compliance? Governments, through the appropriate agencies, require businesses to submit financial statements and tax reports among other documents. It is imperative that these documents are generated using a series of pre-approved steps or phases, and contain accurate information based on their standards.

Accounting software automates the generation of many reports and can perform tax calculations instantly. Many accounting systems can be configured to follow specific tax laws based on city, county, or state. You don’t have to struggle to compute your taxes or reconcile your account as the software does all the heavy work for you.

 

Small Business Accounting: Big Benefits

Accounting is not an easy task, even for small and medium-sized businesses. The introduction of modern accounting software and its growing use has helped thousands of small businesses all over the world hurdle the challenges that come with business accounting.

As the small business sector continues to grow exponentially, you can expect accounting software solutions to become better with improved features and new innovations. If you are a small business owner or someone who wants to run his own enterprise in the future, purchasing a good accounting software should be paramount.

With the availability of free accounting software, some solutions can be accessed without spending funds. However, businesses that need more robust accounting features, such as integrating with QuickBooks or cloud-based deployment, must find the right accounting tool. In the end, careful planning and research are crucial.