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Running a business is no easy feat- it requires considerable time and effort, especially if you’re a start-up. You need to craft workflows, send emails, build financial reports, pay suppliers, and more. It certainly doesn’t make life easier for small business owners because the corporate sector is rampant with competition, and they must juggle multiple tasks simultaneously. According to statistics, there were around 333 million companies worldwide in 2021, and the number is expected to keep growing.
A crucial aspect that small business owners need to pay attention to is accounting, enabling them to keep their company in top financial shape and make better future decisions. Luckily, as technology progresses, so do software solutions. There are various small business accounting software available today that make it easier to streamline operations. Keep reading as we examine what such software entails and why it’s so important.
What is Accounting Software?
Accounting software is a computerized tool that automates and manages accounting transactions and business accounts for accountants, business owners, or bookkeepers. It allows you to automate tasks within the entire accounting process. For example, you can create a financial statement with a single mouse click. If you use a spreadsheet, this task will take you hours to complete. On the other hand, you can automate the journal entry process whenever you need a payment to be made to your business bank account.
Accounting Software vs. Bookkeeping Software
Bookkeeping software is simple, while accounting software is advanced. You can use this software for data entry and storage, such as logging expenses and revenue. A top quality bookkeeping software helps make the financial process much smoother than working on a spreadsheet. It enables you to obtain better oversight of payments and expenses, whether incoming or outgoing.
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Accounting software can be referred to as an updated version of bookkeeping software. In addition to taking care of data entry and storage operations, it provides you with improved accounting and analytic features, including cash flow analysis and forecasting. Both of the software reduces the time spent on data entry every day. All you need to do is sync your credit cards with your business bank accounts.
Benefits of Accounting Software
Collaboration Is Easier
Gone are the days when you needed to edit a spreadsheet, save the changes on a USB drive and then hand it to your colleagues for access to the most updated version of the financial statements. Accounting software holds the benefit of giving everyone access to financial data and real-time accounting.
Employees need to log into the platform and carry out their specific tasks, saving time that can be allotted to more important strategies and tasks. The best part is that more than one user can work on the same real-time accounting data without it becoming a confusion or hassle. You can also give different levels of access to your employees depending on their position and expertise. Accounting software ensures that a system is followed methodologically, protecting your privacy and finances.
With accounting software, you don’t have to worry about common errors made manually. The software will organize your accounting records accurately and properly every time without fail. You can say goodbye to the times you wasted more than a few hours trying to balance a balance sheet. Accounting software will instantly inform you and highlight the potential mistake if a newly created journal entry doesn’t balance; you’ll know there’s an error before committing it.
Another error that can be avoided is an error related to updated data. Suppose you’re editing a table or spreadsheet that was modified beforehand, but you never got a hold of the updated version. In that case, you will waste a lot of time figuring out how to merge changes from two files. Accounting software automatically syncs all the data in the cloud, ensuring that financial reports are more accurate and enabling your team to make and analyze decisions quickly.
It Saves Money and Time
Since accounting software creates financial reports, fixes accounting errors, eliminates repetitive tasks, and much more, it can save your business around 300 hours annually. Your business will be much more efficient and focused on operational aspects that help enhance sales and profits.
Additionally, accounting software usually costs between $10 to $55 per user every month, paying for itself tenfold. If we compare this cost to other software, such as ERP software, accounting software is the best and most affordable method of handling financial affairs for a small business.
Since all your accounting data is on the cloud with accounting software, it is secured. How is that so, you might ask? Your information is protected using layers of high-end algorithms that are heavily encrypted and is a better option than shelving it in the office. All your data is also regularly updated because it is synced, so you don’t have to worry about working on outdated files.
Before, businesses used to integrate desktop accounting software that had all data stored on a hard drive, which held the risk of information getting corrupted, destroyed, or wiped and becoming unusable. Due to this, businesses would dedicate a lot of time incorporating accounting data into their recovery plans, spending more money. Accounting software provides you with peace of mind, and you won’t have to worry about backing up all your important files.
Let’s be honest; no one wants to spend hours sorting through paperwork- it’s expensive and time-consuming. Who wants to photocopy stacks of paper when a copy can be created with a simple click? Financial data such as reports, financial statements, and journal entries are all available online if you use accounting software. You can do it from the cloud if you need an invoice or entry to be created. The software also allows you to send invoices to clients directly and reduces the money and time required to print and post the invoices.
In this digital era, as technology progresses, software and tech tools are becoming an essential part of any business. Accounting software can help your business climb up the corporate ladder quickly and seamlessly. The more your business grows, the more attention you have to pay to your financial affairs. If you haven’t already, now is the time to invest in accounting software and reap the rewards.
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