Small business owners often have their own ways of doing things. After all, they don’t have the worries of multi-million dollar corporations, right? Well, yes and no. There are certainly advantages to keeping your company small, especially when it comes to managing employees or dealing with the hassles of multiple locations. But there’s one aspect of your business that you should treat as if you were a Fortune 500 company: your books. A small mistake in accounting can spell disaster for a company of any size, which is why if you’re not using accounting software yet, you need to get on board.
Paper invoices and manual billing practices increase the odds of someone making an error, especially if you have recurring orders or offer lines of credit to your customers. They’re watching every dime they send to you, so you need to be meticulous in your records, which just isn’t possible with a manual process. It’s easy to lose paperwork, which then leads to lost revenue.
Often, errors on paperwork result from a person’s handwriting, but when you use software to manage your invoices and other forms, that is no longer a problem. Certainly, typos can still be an issue, but typos can be corrected quickly whereas an unreadable document remains unreadable. You also reduce errors that result from missing information because software can be programmed to require specific fields be completed before action can be taken. This isn’t an option with paperwork.
Until you get a handle on how much money is going out the door, you’ll never be able to truly determine how much profit your company is making. Accounting programs allow you to track your expenses so that you can subtract them from your revenue and give you a better idea of your company’s actual earnings. This will also allow you to find places where you can trim your expenses, allowing you to increase your profit even more. With the newest RCM technology, tracking expenses from beginning to end is becoming easier.
If you have employees, it can be even more challenging to track expenses, but with accounting software, you can monitor how much money they spend so you can identify issues and correct them before they get out of hand. Tracking expenses is the only way for you to ensure your business continues to be profitable.
Comply With Taxes
This may be the most important reason to get an accounting program. You don’t want to get in the crosshairs of the IRS and most comprehensive accounting software makes filing your taxes a lot easier. This is especially important if you have to apply different tax rates to different products or services or in different jurisdictions. Tax compliance is vital for small companies, where one small error can have major consequences. If you have to file taxes on a monthly basis, accounting programs can help you do this as well, automatically calculating your revenues and payment requirements.
Small businesses are only small because of the number of employees they have. In the eyes of the owners, they aren’t all that small, which is why all companies regardless of size should be using accounting software to keep their books in order.