Businesses around the world are ditching their paper ledgers in favor of specialist accounting software. Accounting software centralizes, stores, automates, and analyzes your financial data. It’s particularly beneficial for small businesses looking to save time, maximize productivity, and streamline their financial processes.
In this article, we’ll explore the advantages of accounting software for small businesses. We’ll also look at the features to look for when choosing accounting software for your business. Let’s dive in!
Advantages of Accounting Software
There are several benefits of accounting software for small business owners, both in the US and abroad. These include the following.
1. Unifies your accounting systems
You can use accounting software to centralize and automate your accounting processes. Instead of switching between bank accounts, payroll services, and credit cards, or investing in separate software, you can manage all your financial operations in one place.
Accounting software syncs your data automatically. This gives you a unified picture of your finances while saving you time and money.
2. Greater accuracy
Manual accounting isn’t just time-consuming; it’s also more prone to errors. And, as you know, accounting errors can be costly, especially payroll or tax errors.
Accounting software updates your records and performs calculations automatically, helping you avoid mistakes. Plus, if any errors do creep in, the system will immediately alert you so you can correct them.
3. Improves flexibility
Many accounting software solutions are cloud-based, which gives you enormous flexibility. You can manage your finances from anywhere, at any time, and on any device. All you need is the internet plus a computer or smartphone.
This is invaluable if you have to make business trips abroad, for example to the UK or Canada or want to travel while running your business remotely.
4. Saves time
Accounting software automates manual processes like data entry and number crunching. For example, many solutions pre-fill spreadsheets, quotes, invoices, and more, so you can pay employees and send invoices with a click一wherever they are in the world. This saves you and your employees a lot of time that you can spend on growing your business.
5. Enhances collaboration
Because your data is on a cloud accounting software, you and your team can easily collaborate to manage your business’s finances. You can grant access to those who need it, and also give different levels of access for added security. Plus, several people can work on the same accounting data in real-time without getting in each other’s way.
6. Boosts productivity
Automation means accounting software is a great productivity tool. When you use it, you can carry out your tasks much more efficiently than if you did them by hand.
Cloud-based accounting software can help you save time for more productive tasks like creating financial forecasts to show to potential investors.
Top Accounting Software Features
If you’re considering investing in accounting software for your business, there are a few things to consider. When reviewing each solution, ask yourself:
- Does this solution meet my budget? Are there any hidden costs?
- What third-party integrations does this solution offer?
- How secure will my data be?
- What is the customer service like? Is it 24/7 (and does this cost extra?)
- What features does it have? Will they meet my needs?
There are a few must-have features that can really benefit small business owners. Make sure the solution you choose offers most or all of the following.
The best online accounting software offers built-in payroll services, such as automatic payments, time tracking and invoicing, automatic wage and tax calculations, and more.
The software must be able to handle different pay schedules and different types of compensation and benefits. This includes commissions, salaries, retirement plans, health insurance, and so on. You should also be able to manage your payroll anywhere, at any time, at home or abroad.
Many accounting software solutions offer real-time inventory tracking. That means you always know how much stock you have, how much it’s worth, and where it’s stored一including inventory stored overseas. Accounting software may also come with inventory management capabilities like:
- Alerting you when an item is running low.
- Automatically reordering stock.
- Giving you detailed insights into your inventory一for instance, which items are selling well, and which aren’t.
Accounting software should let you take and process payments with ease. For example, some software lets customers pay you from inside an invoice, saving both parties time. Plus, your payments are processed in real-time, so your accounts are always up-to-date.
Be aware, though, that some software charge extra for processing debit and credit card payments, or ACH deposits.
Automatic tax calculations
Accounting software can calculate tax automatically based on your country and business information, so you’ll always pay the right amount of tax. It also ensures you meet the relevant IRS tax regulations, as well as the requirements in any other countries you operate in.
For example, if you or your employees are in the UK, accounting software for making tax digital ensures you meet HMRC regulations on VAT, Income Tax, and Corporation Tax. Or if you’re dealing with the IRS, you’ll easily be able to provide any electronic records to comply with an Information Document Request.
Reporting and analytics
A great feature of accounting software is its detailed reporting and analytics of your financial statements. It has intuitive dashboards that give you an instant picture of your finances, sales, and customers. You can track money in and out by period, bank account, department, country, and more. Plus, you can view detailed cash flow forecasts to help you make more informed decisions.
Accounting software should offer a range of invoicing features. For instance, some software lets you create invoices from quotes as soon as a customer accepts them. You can set up recurring invoices and automatic reminders to ensure you get paid on time. You can even set up automated emails to send invoices direct to your customers’ inboxes.
Plus, you can choose a pre-made invoice template or customize your own, so your invoices reflect your unique brand.
The solution you choose should connect to your bank anywhere in the world and create an automatic bank feed. This allows the software to import data from your bank in real-time and automatically match it to your invoices, purchases, and payments. With accounting software, bank reconciliation is a breeze.
Accounting software must have robust security to keep your sensitive financial information safe. The best accounting software comes with password protection and several layers of encryption. You can also control who can access your data, so only those employees who need it have access.
The Advantage of Using Accounting Software
There are many advantages of accounting software for small businesses. This includes increased productivity, greater accuracy, enhanced collaboration, and more flexibility. With it, you’ll get a unified view of your accounts in real-time, so you can pay employees, send invoices, and file taxes with ease.