Solo-preneurs and owners of small-scale enterprises often struggle with managing the financial side of running a business. It’s no wonder that online accounting software is growing in popularity. These digital solutions help users streamline data entry, organize important data, generate reports, and provide easy access to vital information.
However, the advantages of using online accounting software are not universal. Some companies see a return on their investment. For example, online accounting software may help a tiny startup save hours on financial paperwork, allowing staff to focus on priority tasks. But a similar company, for different reasons, may not find the software helpful at all.
How would you know if it’s a wise move to invest in accounting software? What factors should influence your decision?
Do you manage your company finances? How would you rate your math skills?
At the end of the day, you started your business to earn money, not to spend your days tracking down every single dollar. You may enjoy tinkering with spreadsheets or even find it fulfilling to do double-entry bookkeeping.
But if you’d rather have your teeth pulled out without anesthesia, doing accounting manually is asking for trouble, even for the simplest of transactions.
You may think you’re saving money doing it yourself, but accounting is not a walk in the park, even for professional accountants. You may have all the necessary documentation and receipts, but a small calculator error can lead to a lot of issues later on.
If you don’t have the math skills for accounting task, then it’s best to let technology work for you.
Do you have a clear mental picture of your business finances?
Do you have a good idea of the financial status of your business? You may need accounting solutions if tracking your income and expenses prove too difficult. During the initial stages, it’s quite easy to see how the money goes in and out of your business. You invest in resources for your great idea, like marketing, an office, and your own salary. Soon, customers start using your products and services, and the cash comes trickling in. Easy-peasy.
Until it’s not. Congratulations, your idea is now a hit product! The money trickle soon becomes a roaring river of figures that branch off into a dozen streams to who knows where: more employees, multiple suppliers, inventory, payment in installments, etc. Make sure you’ve got everything in writing from the get-go; otherwise, you’ll drown in that flood of numbers.
And it’s not enough to document everything; you need to do so in an organized way. Without a clear and effective system, you will spend hours double-checking each painstaking detail. Those are precious hours away from your main purpose: making money! This is where accounting software comes in. It automates the process and prevents costly mistakes — say, ensuring you have enough set aside for taxes.
Are you wasting time with invoices? Do you have to chase customers for their payments?
All businesses need to set up organized records for invoices and payments. Sounds daunting? This is another reason why it’s a good idea to get accounting software — not only does it track each dollar that comes in, but it also shows you how much money clients owe you.
Some accounting software systems have robust reporting tools that can predict cash flow for a certain period and evn monitor client payments. Instead of checking multiple files, emails, and invoices, you can now see everything at once. After all, the time saved is better spent improving and refining your core business.
Is someone telling you to get accounting software?
That’s probably your accountant or the government, and you better listen to what they’re telling you. Accounting software can save you from a lot of headaches and legal pitfalls, some of which may prove disastrous to your business. If paying a penalty does not appeal to you, it’s best to be honest about your financial reports during tax season.
Also, why not make life easy for your accountant? He or she will also thank you if you use online accounting software. After all, it saves both of you the hassle of digging through email threads, comparing digital invoices, and collecting worn-out paper receipts.
So, how did you answer these questions? Does using an online accounting software sound like a wise move for your business? If so then check out FreshBooks, a cloud-based accounting and invoice software that is designed for the small business owner.