For many new business owners, accounting is the most tedious process they have to complete. Keeping track of finances isn’t usually what people have in mind when they think of ditching their day job and following their passion, and for those who struggle with maths, accounting can go from dull to extremely complicated.
Luckily, cloud-based accounting software is now accessible to all business owners, including self-employed entrepreneurs starting out on their own. However, the cost of accounting software can still be off-putting to some people. If you’re considering getting accounting software but are still unsure, here are the main benefits you can expect.
1) Improved Accuracy
First of all, accounting software can improve financial accuracy. Doing bookkeeping manually can often lead to human error, especially for those who aren’t confident with their maths skills. However, even with strong maths skills, errors can still crop up from time to time and cause huge problems with accounting accuracy, particularly as tax deadlines approach.
Since accounting software can perform these calculations automatically, it will greatly increase the overall accuracy of a business’s bookkeeping and accounting. This can prevent many potential disasters for self-employed business owners.
2) Complying With Regulations
From time to time, new accounting rules and regulations will be introduced, especially in relation to taxes. If you’re a busy entrepreneur, it can be difficult to keep up to date with all of these changes and ensure that your business is always following the right rules.
Accounting software can help businesses comply with these new regulations. Whenever there are changes in tax and accounting laws, software solutions are updated to reflect this, or new software products are released. One example of this is the UK’s new Making Tax Digital (MTD) laws, as accounting software companies swiftly made their software MTD-compliant to help businesses stay on the right side of the law.
3) Increased Efficiency
In addition to increased accuracy, accounting software can increase efficiency for all businesses. Manual bookkeeping can take a lot of time, especially for those who have complex finances or are less confident with accounting and administration tasks. Accounting software can greatly speed up this process through instant calculations and automation. For example, accounting software can automate tasks such as payroll, invoice generation and bank reconciliation, allowing business owners to spend more time on other projects.
4) Improved Understanding
Even though accounting software can reduce a lot of the time spent on accounting and administration tasks, it’s important to remember that business owners shouldn’t neglect this side of the business, as it’s essential to be aware of your business’s finances at all times. However, accounting software can actually aid an understanding of financial matters, despite its automation of accounting processes.
This is because accounting software can introduce new business owners to concepts such as filing taxes accurately and on time, looking at cash flow forecasts, creating invoices and reading financial reports. Additionally, many software packages include how-to guides and tutorials, which can be invaluable for new entrepreneurs.
5) Lower Costs
Although software packages usually require a monthly subscription, this expense can be much lower than the cost of hiring a freelance or full-time accountant. This is especially true for basic accounting packages, which will usually include all you need when you’re just starting out.
As the business grows, it may be necessary to hire an accountant or upgrade to an advanced software package. However, beginning with basic accounting software can help new business owners save as much money as possible when it matters most.
6) Better Collaboration
Hiring an accountant doesn’t mean you no longer need accounting software or no longer need to be aware of your finances. Accountants use accounting software to improve accuracy and efficiency, so if a business already has an account set up on a software program, this will be extremely helpful.
Additionally, with cloud-based accounting software, multiple users can have access to the same account, which means that the business owner and the accountant can share important financial information and work together on documents and reports. This will allow the accountant to step in as soon as any issues arise and offer real-time guidance.
7) Data Security
Another benefit of accounting software is that it offers greater data security. By completing accounting tasks manually, business owners could be risking data theft if someone were to access their computer or personal files. Cloud-based accounting software is a much safer option as all data is behind a firewall and encrypted. This makes data breaches very unlikely.
8) Improved Decision-Making
Finally, accounting software can improve financial decision-making and therefore aid a business’s growth. By having access to detailed financial reports and cash flow forecasts, business owners can spot financial trends and easily monitor the health of their business. This information can then be used to guide future decision-making, and since these decisions will be based on accurate data, they’re more likely to be successful. Overall, this can lead to faster growth and an improved ability to spot future problems before they arise.
Although accounting software may seem like a big investment, the benefits can certainly justify the initial cost. In fact, since so many businesses now rely on accounting software, not following the trend can actually harm your business as you won’t be able to access the same resources. So, if you’ve just started a business or are thinking about becoming an entrepreneur, make sure you research accounting software solutions to find one that’s right for you.