Small business owners often need to multitask.
From strategic planning to sales and marketing and product development to recruitment, they are in charge of everything. Unfortunately, studies indicate that multitasking is a productivity killer, besides, there are a few areas in business that require special knowledge and expertise.
A small business owner is not an accountant and would do better spending time running his/her business rather than stressing out about tracking expenses and managing company’s finance.
This is where invoicing and accounting software come in use. The right solution can help your life as a new entrepreneur easier. That being said, many small business owners take impulsive decisions when it comes to buying accounting software. The common approach of “pick, click and done” often goes wrong as you tend to buying an accounting tool even without define the scope or requirement of the job.
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Do You Really Need Accounting Software?
Though investing in an accounting tool is a smart move, you must choose the right one for your business. For some start-ups, even manual ledgers and spreadsheets can do the task while other can get away with basic accounting software. It is the ease and efficiency of the tool that plays a major role when it comes to selecting accounting and invoicing software.
But before that you need to determine if you actually need an accounting tool. If any of these following situations apply to your business, consider investing in an accounting tool:
You are a startup. As mentioned, small business owners and new entrepreneurs already have a lot in plates and investing in a cost-effective and simple accounting tool will help them to shed off some of the burden. Besides, it makes your business more organized and will especially benefit you while seeking financial aids from banks and other investors.
Your business is growing. If your business is expanding quickly, having a manual accounting system won’t be sufficient. Moreover, the process will become more complicated as and when your business grows. By investing in an accounting tool you can save both time and money by automating the entire process. Most accounting tools are highly scalable to the size of your business.
You are streamlining your business operations. You can use accounting software to integrate every aspect of your operations, ranging from day-to-day transactions to payroll. It can even input data automatically from other systems including your CRM, ERP, POS and other third-party solutions.
You want immediate access. If you are looking for an easily accessible database for your financial and customer information, accounting software is a great choice. It also stores information like clients and vendors contact details, credit terms, purchase histories and more.
Your existing accounting system is too complex. Some accounting systems are too complicated for small businesses. They come with features you will probably never use. If your accounting tool is too difficult to use for day-day operation, consider investing in solutions that are specifically made for small businesses
You want to comply with small business financial regulations. If you are clueless about the Generally Accepted Accounting Principles (GAAP) or about tax laws and other financial regulations, you will need an accounting tool that can do the legwork on your behalf and guide you through the compliance process.
If you want to manage your business's finances efficiently without hiring an accountant, investing in accounting software is the right solution for you.
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What Features to Look For?
For most small business owners, ease-of-use is the prime concern when selecting accounting software. However, there are other factors you should consider as well to better manage your finances.
- Basic accounting tasks: It must offer basic functions such as tracking income and expenses, sending invoices via email and snail mail, client and vendor management and generating financial reports etc.
- Automation: The tool must provide automatic billing, past-due notifications, recurring payments, and automated processes to save both your money and effort.
- Tax preparation: Opt for an accounting tool that helps in tax calculations, tax reporting, provides multiple tax rates, and can store all necessary data so that you can email the same to your accountant whenever required.
- Quote and estimate creation: For a small business, accounting tools that offer customized templates to create and send estimates and quotes to clients and then convert them automatically to invoices is a great choice.
- Payroll processing: Your accounting software must be simple and effective enough to handle payroll processing. With some of the best tools this means simply entering the timesheet, calculating pay, and processing the payment.
- Mobile access: These days almost all popular accounting tools are accessible from mobile phones or tablets. This is a great feature to look for if you are always on the go and need the ability to manage the books at anytime, anywhere.
Popular Accounting Software for Small Businesses
As mentioned, the right accounting solutionis key to managing your business’ finances successfully. Here are 4 recommendations for small businesses:
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Small Business Workbench
Small Business Workbench helps you in cash-forecasting and managing working-capital. However, choose this online tool for its capability to trigger marketing recommendations. It also integrates multiple apps seamlessly to help make cash forecasting even more accurate.
Image via Small Business Workbench
QuickBooks is a popular brand, this accounting solution offers a host of features including creating custom invoices, payroll processing, generating expense reports, tax calculations and deductions, allowing wire transfer payments, providing real-time credit card and bank data, and device syncing
Image via QuickBooks
Xero is a tool designed especially for small businesses and can handle everything, ranging from expense management, payroll, bank account reconciliation, purchase orders, inventory tracking, and financial reporting to customer payments and invoices.
Image via Xero
A time-tracking app, Harvest integrates billing and invoicing tools. Creating timesheets is as easy as entering start and stop times and the information is translated to billable hours to generate invoices. Other features include creating reports, digitally store receipts, log expenses and connect to over 50 business apps, the likes of which include Google Apps, Basecamp and Salesforce. You can use this app on both desktop and mobile devices.
Image via Harvest
Not all businesses are same. The accounting needs of small businesses are often diverse. Your accounting tool should therefore be a good fit for your particular industry as well as serve your business needs. Also remember that although it is a great option to automate your accounting and invoicing process, you may still need an experienced accountant to handle more complexbookkeeping tasks and tax filing.