Last Updated May 27, 2022
When starting a small business there are so many things to take into consideration. From running operations to determining the target audience, there is a seemingly endless amount of tasks that need to be dealt with. It can be difficult to manage all the aspects of running a small business and to do it all well and in a timely manner!
One of the most common stressors that a new small business owner faces is dealing with accounting and this is for good reason! It is fairly common that a new small business owner does not have an extensive knowledge of accounting and can find trying to learn this process while running a business to be quite daunting. In fact, Small Business Report found that a whopping 60 percent of small business owners don’t feel like they have a good knowledge base of accounting. Thankfully there are several ways that a small business can manage their accounting needs easily and effectively without becoming overwhelmed.
Thankfully there are several high-quality accounting software programs currently on the market that are geared towards assisting small business owners in this very area. Many small businesses have found this to be extremely beneficial as it not only helps them with their accounting needs but it also enables them to feel like they have a better understanding of accounting and more confidence in their abilities. Below is an outline of what features to look for when considering an accounting software. Ready to learn what makes for good accounting software? Read on!
Table of Contents
Why Do I Need Accounting Software
Before you dive into what makes for a good accounting software program, you may be wondering why you even need accounting software. This may be especially true for a business owner who has a good grasp of accounting and feels comfortable working on the accounting side of their business. Below are some of the benefits that come with using accounting software in a small business setting. It is sure to convince even the most skeptical of small business owners!
Benefits of Accounting Software
Improved Accuracy
Often when businesses are just starting, all the accounting is done manually. While there is nothing inherently wrong with this method, it does leave a lot of room for error. By doing all the calculations manually, that means that all the math will be done by hand, there is a larger risk for a missed step or mistake. While this is a small error, it could potentially have a larger impact on the business owner or even the business.
When using an accounting software program, there is significantly less room for error as the calculations are being done on a computer program. Since the computer is using its calculator the results will be much more accurate as well as the result will be displayed in a much more timely manner! Using an accounting software program will ensure that you get accurate results each and every time and you will get these results as quickly as possible!
Increased Efficiency
When using a manual accounting method, it is much more difficult and tedious to update your accounting files. Doing all the math by hand and then having to start right back at square one if you encounter an error is not the best time-saving model. Using accounting software is significantly more reliable as well as quicker than any other handwritten or manual method. And there are several reasons that cloud based accounting software programs have this type of advantage!
A software program that can make calculations much faster than a human can. That means results are delivered in seconds as opposed to the minutes that it takes when doing the calculations manually. The software program also saves precious time as the results are correct the first time the program runs its calculation. This automation prevents the business owners from having to go back and rework some calculations as often is necessary in the manual methods. In addition to this, an accounting software program also increases efficiency by introducing automation. This automation saves a small business owner precious time and effort from having to run the same calculations or entering the same data over and over again!
Ability to Scale Business With Accounting Software
Another excellent benefit of converting over to a cloud based accounting software program is that this system gives the small business room to grow. Due to the nature of the system, there is no real “set size” that the system only functions under. It is quite the opposite. Given the cloud accounting software that is being used, it is possible to update the software as the small business grows without any repercussions or side effects. To put it another way, the cloud computing accounting software programs grow with you and your business!
Accounting Software Brings Simpler Tax Filing
Using accounting software is extremely helpful especially when it comes to tax season. Tax season is known to be quite a pain and this is especially true for small business owners. Anything that can alleviate any frustration, no matter how small, is sure to be welcomed by any small business. Thankfully a good cloud based accounting software program can do just that.
This software can be so helpful as it gathers all of the company’s financial details as a business owner is continuously using and updating the program. Because of this, it is extremely simple and straightforward for the business owner to get the necessary financial information that is needed to file taxes. Having all the information neatly sorted in one organized location helps prevent any additional stress when filing taxes. Some accounting software programs are compatible with tax return software, which can easily automate a small business owner’s tax filing process!
What Exactly is a Cloud Based Accounting Program
While a small business owner begins their search for accounting software, it is common that they will come across some terms that they may be unfamiliar with. One of these terms that are frequently used in these programs product descriptions that these businesses may be unfamiliar with is if the accounting program is cloud based. Now, what exactly does this mean?
A cloud based or a “cloud computing” accounting software is a software program that is being hosted and stored in servers that are remote, or not physically in the office. The way that this system works is that all the information is being sent to a remote server, which is referred to as “the cloud” and then is processed and then sent back to the original sender. For users to access these files they can access the software applications remotely through the Internet via a cloud application service provider.
There you have the basic premise as to how a cloud based accounting program works. But you may still be wondering why to switch over to this method, especially when the whole premise of this software can seem so “out there” and overly reliant on technology. Below is an outline of some of the benefits that come with switching to a cloud based accounting software that will hopefully shed a little more light on why so many small business owners are making the switch to this type of software.
Accounting Software Benefits
Many benefits come with using cloud computing accounting software. Below are 5 of the main reasons that small business owners have cited as their reasoning behind their switch however there are an endless amount of reasons why a small business owner considers the switch. Hopefully, after you switch to this type of accounting software, you can add a few benefits of your own to the list!
Little to No Maintenance
One of the best parts of switching to a cloud computing accounting software is that in doing so you exponentially cut down on the need for maintenance! Using in house servers can be quite expensive and time-consuming, however, due to the nature of a cloud based accounting software program, there is no need to be constantly updating the server or hiring the staff to do so. The remote server that is used by cloud based software updates automatically making it a breeze to use!
Money-Saving
Similarly to what was mentioned above, a cloud computing accounting software saves a small business owner from any unnecessary costs as it does not require using an in house server. By removing the need for an in house server, it saves the business owner from any of the costs that would entail including costs such as installation, maintenance, and labor.
Additionally, there is a large variety of cloud computing accounting software currently on the market. If a small business owner is smart, it is possible to ‘shop around’ a bit and get an excellent competitive price on an outstanding software program. Once again these types of savings are not available for other types of accounting methods- only for the accounting software programs.
Accounting Software Helps Increase Your Clientele
Not only can a cloud based software program save a business time and money but it can also attract more customers! In a recent study, it was found that companies that exclusively use cloud accounting add five times the number of clients. That is a huge boost in client numbers! What is the reason behind this?
There seem to be several factors at play regarding the boost in clientele for companies using cloud based accounting. The first could be an increase in performance. Using a cloud based software program ensures less room for error than a manual accounting system. This results in increased productivity and happier clients!
The second reason as to why these small businesses saw a boost in clientele is that they became more user-friendly! By taking advantage of the secure files sharing and client portals that some accounting software provides, the clients feel more at ease and included in the process which adds to the overall positive customer experience.
Up To Date on Updates
Another excellent reason to consider using a cloud based accounting software is updates are done easily and automatically. This occurs because the cloud software is based out of the cloud, which is hosted on the internet. Once updates are released and needed, the cloud automatically updates its software! This ensures less stress and one less thing for a business owner to think about as well as ensuring properly running software each and every time!
Integration
Another reason that many small business owners are moving towards using cloud based software is that it is easy to integrate other necessary software. This is especially true for accounting! As mentioned above some of the accounting software currently on the market is compatible with a variety of software including tax return software.
This means that when tax season comes, filing your business taxes will be a breeze as you will already have all the necessary information in one safe place. In addition to this being able to connect your preferred tax return software to your cloud based accounting software means that a good amount of information will be able to be transferred from the accounting software and be filled into the tax return software. This makes for the easiest type of tax filing and gives a business owner some much-needed relief from an otherwise extremely stressful time of year.
What To Look For in Accounting Software
After diving into why a small business should be using accounting software and what exactly a cloud based accounting software program means, most business owners are sold on using these systems and looking to get started. But there is a large variety of accounting programs on the market and it can be difficult to determine which software is the best suited for a company.
Below are a few general tips and tricks on what to look for when considering converting over to an accounting software program. There can be a lot of programs to sift through but these tips should give each business owner a good idea of what is important to look for. Ready to find the right software program for you? Read on!
Accounting Software Has Online Storage
One of the biggest draws to using an accounting program is that all the documents are in a safe and contained space- online! This results in a much more organized filling process as all-important accounting documents are stored in one safe location that can be easily accessed by someone with the proper credential. Plus there is no more clutter in the office with random papers floating around which often results in chaos and missing papers! A win-win solution!
Another excellent benefit of using a cloud based accounting software system is that it is easily accessible, even to employees that currently are not in the office. This feature gives employees the option to work from any location that they would like and gives the business owner and employees the flexibility to choose their workspace and no longer be chained to the office as they once were with the manual accounting methods. This option to work in any location that they please helps give a little bit more of a good work-life balance to the small business.
In addition to this, online storage saves costs! Forbes found that using a cloud based computing system reduces labor costs by up to 50%. This is possible because companies are no longer looking to hire individuals who are in charge of maintaining any inhouse systems when a company has switched over to a cloud based remote server. When switching over to an online storage system, a small business will not only save time and effort but money as well, something that every small business is looking to do!
Accounting Softwares Client Portal
Another feature that is important to look for when considering an accounting software program is if a client portal is included. A client portal is a feature that a good amount of software programs offer and many small business owners have found this feature to be endlessly useful. Here is why so many small businesses find it so helpful!
A client portal essentially acts as a liaison between the small business owners and their clients. This portal allows clients to log on to the small business portal as they wish and reference any contracts or important documents as they feel the need to. Not only does this save the small business owner precious time by avoiding having to constantly send and resend the same documents as their clients need to reference them, but it also provides the client with a piece of mind and a feeling of more security as they can reference the materials as they please.
Another huge benefit of the client portal is that most software offers an e-Signature feature. This is an asset to both the small business and the client as it speeds up the contract processing time, can be done remotely and has no additional costs or fees associated with it. A client portal is beneficial to both the small business and its clients saving everyone time and effort!
Accounting Software That Has Secure Files
Another great benefit of a cloud based accounting program is that it provides a location to securely store small business files. By storing important files on cloud based accounting software, these files are protected against any potential security threats or viruses that would otherwise target the company. However, this security goes further than just the stored files.
In addition to the secure files, the e-Signature feature is also considered to be more secure than a regular signature. The reason that the E-Signature is considered to be so secure is that it is less susceptible to be tampered with or even forged. Naturally, security is a top concern when it comes to sensitive documents so knowing that these files will be safe and secure on the cloud based accounting software should put even the most nervous small business owner at ease.
Secure File Sharing With Your Accountants
Similar to the above mentioned secure files, there are account software programs that ensure secure file sharing. This comes into play not only when discussing the client portal but also when looking to transmit files to either other partners, other members of your team or even the CPA that you are working with. It is crucial that these files are sent to the correct parties but are done so as securely as possible.
This is ideal as you still want to ensure security on these private files, even if you are sharing them with parties outside of the accounting software network. Thankfully, these software programs allow the business owners to send these private files to whoever they need to regardless if they are an employee to the small business or if they are a client. The secure file sharing option allows a small business owner to maintain the security of their files while still being able to share them with who they need to conduct their business.
Conclusion
There you have it! A definitive guide to accounting software. Hopefully, as you went through this guide, you started to feel more confident in knowing what to look for in an accounting software program once you begin your search. The benefits that a cloud based accounting software program offers for a small business are endless and are sure to bring your company to the next level!
