Why Small Businesses Need Accounting Software Small businesses need accounting to stay afloat. Using pen and paper or spreadsheets for accounting and bookkeeping can become cumbersome as your small business grows. The best accounting software can quickly deliver the information and data you need to move an invoice from a draft to a client-ready version, manage bank accounts and credit cards, and track inventory.
Why do Small Businesses Need Accounting? Small businesses need accounting software for several reasons. Firstly, it helps them accurately track and manage their financial transactions, invoices, and expenses, ensuring compliance with accounting standards and regulations. Secondly, accounting software provides real-time visibility into the financial health of the business, allowing owners to make informed decisions and plan for the future. Additionally, it saves time and reduces human error by automating repetitive tasks and generating financial reports, ultimately increasing efficiency and freeing up resources for other essential business activities.
Top UK Accounting Software
Company Best for Score
Xero Automation
4/5
Sage 50 Cloud Inventory Tracking
4/5
Wave The Smallest Businesses
4.5/5
Freshbooks Sole Proprietors/Small Businesses
4.5/5
Patriot Accounting Novices
3.5/5
Quickbooks Most Small Businesses
4.5/5
Zoho Books Advanced Functionality
4.5/5
1. Automated Bookkeeping Before accounting software came along, it was common for business owners to store files and ledgers in physically large storage areas. Trying to find specific entries was time-consuming and prone to error. Today, automated accounting programs make it a snap to retrieve data by file name, owner or other metadata. Besides minimising human errors, accounting automation saves on costs.
It eliminates the need for a team of accountants to complete data entry tasks. It also reduces the amount of paper and printing processing financial documents. This allows your company to scale without spending additional payroll and office space. Moreover, it enables you to track expenses as they happen, improves expense reimbursement turnaround and helps in accurate forecasting. This, in turn, helps you make informed business decisions.
2. Time-Saving Reports A good accounting software program offers a variety of time-saving reports that simplify the process of creating invoices, reconciling bank statements and creating financial statements. Some programs can even create customised reporting to meet your unique business needs. Firms, freelancers and consultants that work with multiple clients on projects should look for accounting software that can handle project-based invoicing and track time spent on each task and project.
The program should also allow for automatic tracking of expenses and reimbursements and tax calculations. Most good online accounting software features a direct link to your business bank account, which makes it easy to import real-time data and reduces the chance of manual errors. Some systems also offer advanced functionality, such as shipping label printing that can be included with orders or invoices and cost estimation based on weight or distance.
3. Expense Tracking Many business owners rely on paper forms or spreadsheets for expense tracking, but this approach can add to manual work for employees, managers and accounting departments. Accounting software eliminates these pain points by scanning receipts and automatically sending them to accounting for approval, reducing compliance costs and time spent logging expenses.
In addition, some programs can also connect to your bank, automatically importing real-time data and matching and reconciling transactions. This can save you money by avoiding costly mistakes caused by human error. For businesses with variable wage schedules, such as freelancers and contractors, a sound accounting system should be able to handle complex payroll calculations and direct deposit payments. It should also be able to track mileage and other expenses for tax deductions.
4. Inventory Management Accounting software keeps track of your company’s financial data and offers features for managing expenses, billing customers, tracking inventory levels and preparing tax statements. It also offers functions for analysing and reporting business trends to help you grow your small business. A robust inventory management system can help you meet customer demands, avoid stockouts and manage carrying costs. Look for software that can automatically match and reconcile bank statements, offering high visibility into all stock across multiple facilities and locations.
Whether you work with a team of freelancers or have employees, an efficient invoicing system can help you get paid faster and more accurately. Consider options that offer the ability to email invoices and accept online payments. And look for a program that can automate payroll processing and taxes to save time and money.
5. Payroll Whether you have salaried employees or hourly workers, a good accounting program helps keep your books in order. It can help you determine how much to pay your staff, automate the payment process, and record payments received for work done. It also makes it easy to reconcile accounts and produce tax forms. The best online accounting programs can sync financial data across various platforms. This reduces the time spent downloading information from different systems and manually compiling reports.
In addition, many software solutions come with various ready-to-use reports for your review. They can include P&L statements, balance sheets and cash flow statements. They can even provide customisable reporting templates to meet your specific needs. These features save you valuable time and make it easier to run your business.
Small Businesses Need Accounting – Other Useful links about Accounting Services: What is the Best Free Payroll Service?
What is HMRC Payroll?
What Qualifications Do You Need For A Job In Payroll?
Remember to Compare Your Business Costs is here to help your business every step of the way, from business advice or saving you time and money on your business purchases such as: