Understanding profit and loss is important for any business, but it’s especially vital for small businesses with tight budgets. Spending too much can quickly put these small businesses in danger, while miscalculating profits can lead to overdrawn accounts. That’s why as a business owner, you need to know exactly where your accounts stand. Opting for one of the best bookkeeping software options is one way of tracking your income, expenses, and accounts receivable/payable.
There are many different types of bookkeeping software out there, though, so selecting one may seem daunting. Understanding why you should use this software, what to look for, and the benefits it offers can help you narrow down your options.
Why Use Bookkeeping Software?
There are several reasons why using bookkeeping software can help you more effectively run your business. First, you need some way of keeping track of all of your income and expenses. Writing them down in a notebook may work at first, but you will have to do all of the math yourself. This method can also quickly become unorganized. If you lose the notebook or any paper version of your accounts, you likely won’t have any type of backup. Even if you do try to keep two written copies, it can be easy to forget to record a transaction in one of them.
One step up from using a paper accounting method is using software such as Microsoft Excel or Google Sheets. These spreadsheet programs provide some benefits. They can do the math for you, and you can back them up to your personal cloud or to a flash drive. However, they aren’t full accounting programs. They don’t have features such as reconciliation or account management. While they’re better than using an accounting book, they aren’t perfect.
Bookkeeping software is designed specifically for accounting. Other spreadsheet programs can be used for a variety of different tasks, but bookkeeping software cannot. It includes all of the features and functions you’ll need to keep your accounts, vendors, employees, taxes, and more accurate and up to date. Information can be easily backed up and even shared with your accountant or other financial advisors.
What Should You Look for in Bookkeeping Software?
When you begin your search for bookkeeping software, you may feel overwhelmed. There are many options, and some of them may look almost identical. You will find many of the same features across the board, but that’s to be expected. These are the accounting and financial tools you’ll need in order to keep your accounts accurate.
One of the first things you’ll want to look for as a small business owner, though, is software that is specifically aimed at your needs. Small businesses do not have the same bookkeeping needs as large corporations. You may not need software that handles payroll, hours billable, inventory management, or other options. Make a list of the features you need in an accounting program in order to help narrow down the field. You may need to do some research into this if you’re not familiar with accounting. Sometimes, it can help to see what accounting programs offer so you can decide if you need those features.
In addition to features, price is certainly going to be a factor. You may find that some software is simply too costly for you. However, most accounting programs aimed at small businesses are affordable. Software has become even more affordable thanks to SaaS, or Software as a Service. Instead of buying the license for software, you subscribe to it. As long as you have an active subscription, you can use the software on any computer. Just download it and log into your account.
This means your books are available anywhere, too, because they’re stored in the cloud. You can make backups to your personal computer, of course, but the information will also always be synced with your online account. You’ll always have access to your accounts.
Benefits for a Small Business
Once you’ve found the right bookkeeping software for your small business, you want to make certain you’re getting the most out of it. There are many benefits you will want to take advantage of. For example, most software available today, especially cloud-based software, works on mobile devices. This means you can complete a transaction and immediately invoice the customer. You can take photos of receipts or bills and immediately upload them. You can track the time you spend on a job and invoice for the time right away. You may be surprised at how convenient it is to have your bookkeeping software available wherever you are.
Another benefit is that accounting software will track all of your taxes. You input the correct rates for your location, and your software does everything for you. It will automatically insert the right amount of sales tax on your invoices, note how much tax you owe and how much you’ve paid in, and more. It makes filling out your tax forms and making payments incredibly easy. This also helps ensure that you are being compliant with all federal, state, and local tax laws.
Most bookkeeping software comes with a variety of different reporting and analytic tools. These tools will help you see where you’re spending your money, what your main source of income is, what type of spending trends your customers exhibit, and more. It can be incredibly helpful in maximizing profits while keeping your expenses under budget. Be sure you look at all of the different analytic options. You may find your software can generate reports you never thought of that provide key insight into your spending habits.
Finally, of course, a major benefit of using software is that it’s accurate. You don’t need to do any math by hand, nor do you risk making errors in transcribing numbers from a calculator to your software. The only thing you have to do is make certain you’ve entered the numbers accurately. Your software will do the rest.
The Four Best Bookkeeping Software Options
There are many different software options out there, but here are four of the best bookkeeping software options that many small businesses should be using to improve efficiency and accuracy:
Quickbooks by Intuit is one of the most well-known accounting software packages available. Many businesses of all sizes use it. For small businesses, Quickbooks Online is a great option. It is designed to be scalable, so it will continue to work well for your business as you grow. It’s also widely used by accountants and other financial experts, so anyone you work with will likely understand Quickbooks. It makes use of cloud-based backups, has a mobile app, and can integrate with many third-party apps.
Gusto provides great support to bookkeeping software, with it’s primary focus is being a payroll service provider. For small businesses with employees, it’s a great option. The software assists with tracking time, calculating insurance withholdings, and much more. Gusto is quite affordable for small businesses, too. Gusto can also help with your payroll tax filings, benefits for your team and much more!
Bill.com works with Quickbooks and other bookkeeping programs to bring automation and other features to your software. This creates one single platform you can use to handle your payments, invoices, and other tasks. The goal is to create a more efficient method of bookkeeping while keeping all of your information synced across platforms. Bill.com has tools developed specifically for small business users and provides a process for capturing and approving bills allowing you from passing paper around desks at your company.
Expensify helps you track your employees expenses. This tool is very affordable, so small business owners will have no problem budgeting for it. However, it can be scaled up for mid-sized and large companies. They offer options such as optical character recognition for invoices, the option to integrate with other tools, and a variety of other functions. Using Expensify you’ll find it helps make your accounting much more efficient.
Which Combination is Right for You?
You’ll want to look at these four bookkeeping options plus others and compare them to your list of tools you need. Take your time and read plenty of reviews. Some applications also offer free trials, so take advantage of those as well.
Protea Financial is Here to Help Your Small Business Pick the Best Bookkeeping Software for Your Needs
While using bookkeeping software can certainly be helpful, it won’t be able to answer all of your questions or provide you with helpful suggestions. For that, you need a bookkeeper. That’s where Protea Financial comes in. We’re a team of virtual bookkeepers who specialize in helping small businesses with all of their accounting, bookkeeping, and other financial needs. Because we’re virtual, it doesn’t matter where you’re physically located. We’re here whenever you need us. We work with you via email, phone, and video chat.
While we do offer bookkeeping, we can also assist you with taxes, inventory management, payroll, compliance, and all other aspects of accounting. We will work closely with you and your team to accurately keep your accounting records, file your taxes on time, and assist in improving any areas of your company that are out of compliance. To learn more about how Protea Financial can help you or to get a quote for our services, contact us today.
Let the experienced professionals here at Protea Financial help you discover which bookkeeping software title will suit your needs!