Making the accounting system efficient and convenient is crucial in running a business. Generally, it’s advisable to have a smooth-running system in place right at the start of the operations.
Today, there is an increasing number of accounting software packages available that suit big and small business accounting. Accounting software is a class of computer programs that allows organizations to better manage their financial transactions. These programs that vary widely in scope are designed to do more than just simple bookkeeping, as some can be used to manage a large company’s entire financial comings and goings.
It is highly recommended that companies use accounting software for enhanced payroll management, wise use of resources in their finance departments, and avoidance of costly bookkeeping mistakes. Completeness and accuracy of data side, here are more reasons to track your business’ financial transactions with accounting software.
1. Fast Processing
Using accounting software enables businesses to process their accounts at a faster pace as opposed to manual processing. The speed is the result of the use of computers which can process figures way faster than the human brain.
Automation also empowers increased efficiency. A business that needs to record sales tax of all transactions can benefit from an accounting software since it can automatically configure each entry. That is a lot more efficient than hiring a staffer to work on the tax by hand.
2. Simpler Bank Reconciliation
With an accounting software, missing deductions will be a rather rare occasion especially when you reconcile your bank account on an automated software. The account won’t balance if you don’t post the bank charges or the missing receipt for that debit card transaction at the office supply store.
Accounting software reduces, if not, eliminates human errors in calculations. Manual bookkeeping comprises mathematical equations by hand, which slows down financial transactions that could have a great impact on the end balance.
Computers, on the other hand, are virtually incapable of making such errors. However, it should be noted that accounting software is not immune to human errors arising from data entry or interpretation mistakes.
4. Easy Retrieval of Business History
Nothing is more satisfying than producing a comparative income statement to compare your current year activity with that the previous years. While a spreadsheet program can hand you this, data entry usually comes off clunky with a lot of inaccuracies.
On the one hand, accounting software makes spreadsheets easier to assess. You can always dump your data from the software to your spreadsheet program in the event you want to play with the numbers and do projections.
5. Formalized Financial Statements
A computerized accounting software program can provide profit and loss statements and balance sheets, which are necessary for evaluating your business’ progress. Financial statements are presented to investors when seeking their financial backing.
6. Audit-Proof the Books
When dealing with IRS auditors, and the agent sees that the books have been kept on a formalized accounting software, especially by a professional bookkeeping service, the audit tends to be short.
The agent will run a cursory review of the bank statements, and if things line up with the software, he or she may take a sampling of expenses to audit, rather than going line by line.
Filing business taxes is a complex, often tedious process that requires you to keep a close track of all your business’ transactions Accounting software extends an easier process by ensuring that all of a business’ financial details including its payroll management system are in one place.
Moreover, companies such as Intuit and ATX produce tax return software that integrates with their accounting programs. This allows a company to semi-automatically return itself instead of spending time and resources working out the necessary details by hand.
Businesses—big, small, or start-ups—need to ensure that their financial records are complete, accurate, and up-to-date. Preparation and accuracy in the early stages of planning and running a business will pay dividends in the future. These two values may well be the two most important tools that will help you to establish your business.
via Julia Carol Esguerra
Julia Carol Esguerra is a Business Consultant at Bridge Southeast Asia, a business development and client support platform for Technology in Southeast Asia, based in Manila. Offering cloud-based solutions for Human Resources, Sales, and IT.