An accounting software system is a valuable tool for any business. It allows for more accurate record keeping, which in turn means less work and lower risk of mistakes. It enables you to automate labor-intensive accounting tasks and accelerates tax preparation. There are many benefits to using an accounting system, so it is important to explore them before making the decision on what type of software will best suit your needs. In this post we will review some popular features offered by accounting software systems and the costs associated with each one. We hope that after reading this you will have a better idea of how an accounting system can help you grow your business!
What is an accounting software system?
An accounting software system enables a company to keep track of all the various transactions that happen in a business. Transactions vary depending on the company and the industry, but most likely include sales, invoicing, accounts receivable, purchases, accounts payable, taxes, and payroll. All these transactions can be summarized, which provides valuable data for creating charts and predicting future performance.
There are three main types of accounting software systems. First, open-source accounting software is free and can be customized to the needs of the business. The downside is that open-source software may have hidden costs such as compatibility issues, support costs, training, and setup costs.
Second, canned accounting software (or desktop software) runs on your laptop or desktop. The data is also stored on the machine it is installed on. This is a great solution if you live in a rural community with a slow internet connection. It is also easy to use, costs less than other systems, and secure when you are not connected to the internet.
Last, cloud accounting software is stored online. With everyone being hacked these days you may wonder whether your data will truly be safe. The good news is you will not have to lie awake at night wondering if you many years of hard work will one day come crashing down. You are protected—many cloud-based solutions use bank-level encryption, so your finances are as secure as the money in your bank. In addition to security, no installation is required, no updates, backups are automatic, and you can access your data from multiple devices.
What are the benefits?
Using an accounting software system will save your company time and prevent avoidable human errors. Instead of tracking everything in a spreadsheet or a paper system, you have all your transactions in one place. It is easy to see what was spent or how much cash is coming into the business. You always know exactly where to find this information.
Accounting software automates some of the most boring accounting tasks, which dramatically increases the accuracy of your data. For example, you can set up so when a sale is made an invoice is sent to the customer set up on credit. The longer you wait, the harder it is to collect. By automating the process, you increase the likelihood of collecting. Furthermore, you can track your unpaid invoices and offer discounts for early payments.
Another benefit of an accounting system is the ability to track cash flow. Just like you can automate your accounts receivable, you can also automate other areas of accounting such as cash flow analysis. By connecting the accounting software to your bank accounts, you can easily reconcile your bank balance to your book balance in real time. No more waiting until the end of the month to find out where you stand financially.
One commonly overlooked area that is a huge win for businesses using accounting software is staying in compliance with taxes. Without good software, it can be difficult and keep track of taxes owed. A good software will calculate the sales tax and prepare the form for you.
If you opt for a cloud-based system (which I highly recommend), you have access to your accounting software system anytime you want. Literally, access to your business is at your fingertips. You can login anywhere you have a connection. So can your accountant, which makes it easy on everyone. Especially at tax time. Your accountant has everything he or she needs to file a complete and accurate return on your behalf.
Leveraging an Accounting System
New technologies continue to disrupt the role that accountants play in the marketplace. This is good news because accountants are well-positioned to provide the highest value to their clients. Because accountants are trained to see the big picture, they can further develop an accounting system to tailor to the needs of their clients. As a result, your accountant can be an invaluable source of analytics, insights, and best practices.
Gone are the days of the one-size-fits-all approach. Online accounting systems are compatible with hundreds of third-party applications that extend the usability of their platforms. Take QuickBooks Online, for example. There is a reason why QuickBooks has an 80 percent market share. Not only do they offer one of the most affordable accounting software packages, but they also have one of the most versatile accounting software systems. At the time this article was written, QuickBooks simple plan is $25, their Essentials plan is $40, their Plus plan is $70, and their Advanced plan is $150. All plans include QuickBooks mobile apps, support, and app integration.
What sets QuickBooks apart from their competitors is the software integrates well with third-party services, which make your financial management easier. As your business grows, you can add apps for spend management, billing and invoicing, eCommerce, time tracking, analytics, and inventory management. With over 650 apps to choose from, you are bound to find one that addresses any problems your business needs solved.
There are many advantages to using accounting software for your business. With QuickBooks Online you can use an online solution that is tailored specifically to you and your company’s needs. The benefits of a system like this will outweigh any potential risks associated with not having one in place. There are some great opportunities when choosing between different types of systems as well. We know how difficult it can be to choose which type of software works best for you, so please feel free to contact us if you have any questions.
FAQ Section: Accounting Software Solutions
1. What exactly is accounting software, and why is it important for businesses?
Accounting software is a tool that helps businesses manage financial transactions, including sales, invoicing, payroll, and taxes. It’s crucial because it streamlines record-keeping, reduces errors, and accelerates tax preparation, ultimately saving time and minimizing risks.
2. What are the different types of accounting software systems available?
There are three main types: open-source, canned (desktop), and cloud-based. Open-source software is customizable but may come with hidden costs. Canned software is installed on your computer and is secure and easy to use. Cloud-based software offers accessibility, automatic backups, and real-time data syncing.
3. What are the benefits of using accounting software for businesses?
Accounting software saves time, prevents errors, and provides valuable insights into financial data. It automates tasks like invoicing and cash flow analysis, improves tax compliance, and offers anytime, anywhere access to financial information.
4. How does accounting software help in automating accounting tasks?
Accounting software automates tasks such as invoicing, payment reminders, and cash flow analysis. By setting up automation, businesses can improve accuracy, reduce manual effort, and ensure timely payments from customers.
5. What role does accounting software play in tracking cash flow?
Accounting software connects to bank accounts, allowing businesses to reconcile their bank balances with their book balances in real-time. This helps in monitoring cash flow, identifying discrepancies, and making informed financial decisions.
6. How does accounting software assist in staying compliant with taxes?
Accounting software calculates taxes owed, prepares tax forms, and helps in staying compliant with tax regulations. It simplifies tax preparation, reduces the risk of errors, and ensures timely filing, avoiding penalties.
7. What are the advantages of cloud-based accounting software over traditional options?
Cloud-based accounting software offers benefits such as accessibility, automatic updates, and data security. With cloud solutions, businesses can access their financial data from anywhere, ensure seamless collaboration with accountants, and enjoy peace of mind with robust security measures.
8. How can accounting software be leveraged to enhance business insights?
Accounting software provides valuable analytics and insights into business performance. By analyzing financial data, businesses can identify trends, make informed decisions, and optimize operations for growth and profitability.
9. What sets QuickBooks apart from other accounting software options?
QuickBooks offers affordability, versatility, and seamless integration with third-party apps. With plans tailored to different business needs and over 650 compatible apps, QuickBooks provides a comprehensive solution for financial management and business growth.
10. What are the key considerations when choosing accounting software for a business?
When selecting accounting software, businesses should consider the following key factors: Cost, Features, Scalability,Ease of use, Compatibility, Growth objectives. By considering these key factors, businesses can choose accounting software that aligns with their needs and supports their growth objectives.
