Being an entrepreneur is anything but easy. You must juggle various tasks at once while ensuring that your business remains afloat and successful. If it provides some solace, know that you are not alone! According to The Hill, there are 582 million entrepreneurs in the world right now.
There is a lot you can learn from the experiences of other entrepreneurs. One such insight is using accounting software to streamline your operations. As per Statista, 64.4 percent of small business owners use such software to automate the various accounting processes of the company. This makes it easier to comply with the GASB 87 accounting standards, and other accounting rules, so that you don't have to concern yourself with this personally.
Why is such software considered to be a necessity in startups? Here are five reasons why.
- Better accounting accuracy
What may seem like a small human error can translate into an enormous issue in accounts. For starters, let’s say in bookkeeping, you added an account payable of 500 USD instead of 5000 USD. This will cause your balance sheet to be a mess!
While such mistakes are possible in manual bookkeeping, the same is not true if you use accounting software for your small business. Hence, using such software provides you with the opportunity to deliver consistent and error-free accounting results.
However, don’t become too complacent. At the end of the day, even such software requires data entry and is open to errors. But, the margin is surely lesser than manual bookkeeping.
- Your data remains secure
While we don’t wish to scare you, the fact is that startups and medium enterprises are most prone to data breaches. In fact, a study conducted by CISCO revealed that 40 percent of small businesses suffer from severe cyber-attacks!
Rather than relying on your company’s internal security system, using web-based accounting software ensures that your data is protected by a tight security matrix. Most startups cannot afford such data security on their own.
Additionally, web-based accounting allows startups to access their accounting information, regardless of where their employees are. Since the information remains accessible online, no individual has control over it. Multiple users are free to access the software and its insights based on account privileges.
- Effective cost reduction
Can you identify your company’s biggest expense? It is probably the cost of hiring and retaining employees! After all, as per Smart Asset, payroll is the most expensive startup cost across the US, with an average expense of a whopping 300,500 USD for up to five employees!
With payroll already being a burdening expense, the last thing you would want to do is add on to it by hiring dedicated resources for your accounts department. Here, you will need experts for payroll, taxation, finance, etc.
On the other hand, the right business accounting software will do it all for you. While such software does feature the initial cost of installation, purchase, and training of the team, it helps you save up on human resource costs in the long term.
Automate your accounting tasks so that a few members within your company can oversee the mundane and complex accounting tasks. This will also free up your resources for other tasks, thereby boosting your firm’s efficiency.
- Simplifies the taxation process
Everyone hates taxes! Whether as a citizen or as a company, filing taxes always seems like such a technical task.
While no automation software will do the task for you from beginning to end, it simplifies the process.
This is because, for taxes, you require the correct details about different financial documents. Quality accounting software keeps all expenses, receipts, transactions, and records in one place for easy viewing and tallying.
It provides comprehensive and updated reports to its users as well. These reports are ready-made and hence don’t require any input from you. This means that there is at least one thing you don’t need to worry about when filing for your taxes.
- Enhances efficiency of the accounting team
In today’s time, to say that computers outstrip the capabilities and processing speed of an average human mind is like stating an obvious fact.
These characteristics also extend to business accounting software. Their processes are much faster than what can be achieved manually. However, know that being faster is not synonymous with being better at all times.
But, as far as accounting is concerned, certain tasks like data entry, payroll, and invoicing can surely be automated to improve the overall efficiency of the accounting team. This is because it helps in eliminating redundancy and eliminates the need for extensive paperwork.
For instance, when invoicing, such software allows you to enter the client information once in the system, trickling down to link all the relevant invoices, receipts, and transactions. Hence, every time a new invoice is added, you don’t need to input all the details again.
How to find the right accounting software?
Now that you understand the importance of introducing accounting software to your small startup, now is the time to find a solution that meets your business needs. After all, there is a wide variety of software out there for you to choose from.
Here are the core tips that will help you in making the right decision.
- Analyze how your business operates and what accounting skills you and your team have.
- Assign a budget so that you know how much money you have to spare. This will allow you to manage your expenses accordingly.
- Assess the add-on features of the various options to see which boosts functionality.
Ending Remarks
Don’t let the tedious accounting processes consume your entire energy. While accounting is a critical part of your business, your startup is much more than that. Your product development, growth, and revenue generation should be your top priority.
At the same time, don’t let poor cash flow and accounting methods be why you go under. Do your research and integrate the right accounting software to streamline all processes. Put this worry to rest as you focus on other business challenges. Good luck!
