A common question we receive from our clients is, “Does my business need an accounting system and, if so, which one should I use?”
Our answer, in short, is a resounding yes. Without question, all businesses, small or large, need to be using an accounting system. Without one, it becomes extremely likely that important items will fall through the cracks, causing a huge headache later down the line. But before we get into which accounting systems we recommend, let’s discuss why they’re so important for your business.
Why Your Business Needs an Accounting System
There are many reasons businesses should be using accounting systems, but here are a few of the biggest:
1. Accounting systems help track cash flow.
It’s Business 101. You’ve got to be on top of cash flow in order to keep your business afloat. If you aren’t keeping track of income, revenue, customer payments, and more, you’re keeping yourself in the dark.
Accounting systems help keep track of the financial inner-workings of your business operations. These programs track cash flow and revenue for you, and can even stay on top of customers who are overdue on payments. Additionally, accounting programs can generate reports that are vital for tracking the health of your business.
2. Automated accounting systems save time and money.
The beauty of a great accounting system is the automation that comes with it. Automated customer transactions, reports, and cash flow tracking help save you (or your employees) from spending valuable time performing manual data entry.
Automating these tasks within your accounting system also helps prevent the human error that can lead to huge problems down the line. The reality is, math is part of the accounting process and all calculations must be flawless. Accounting programs help reduce the likelihood of miscalculations.
3. Accounting systems make tax time less stressful.
Accounting systems, namely cloud-based systems, allow you to grant access to second parties, such as business partners, employees, or your accountant. This makes tax time much less painful for you (and your CPA!) for a few reasons.
First, most accounting systems have the ability to generate reports and necessary documentation for your tax professional. Second, because your accounting system has been keeping track of your business financials for you, you can confidently hand over those documents knowing they’re free of error. Third, if your tax professional has second-party access to your accounting system, the transfer of documents can be done instantaneously and securely.
Additionally, with real-time and accurate accounting systems, your CPAs can provide real-time, proactive tax advice. Without such a system, your CPA is basically taking a shot in the dark. The most valuable advice is to work with a good tax CPA proactively throughout the year so they can help you save taxes before its too late.
Trust us: with a great accounting system in place, your accountant will thank you.
Which Accounting System Should I Choose?
We’ve ironed out a few of the biggest reasons all businesses should have an accounting system in place. But with so many programs from which to choose, which is right for you and your business?
The three accounting programs we recommend to our clients:
Of the three, our favorite is QuickBooks Online. It’s in the cloud, so you can access it from any device. Accordingly, you can share access with your accountant or other people in your business. Plus, it is imperative that any unexpected accounting hiccups are resolved as soon as they arise. When your accounting system is in the cloud, you’ll be able to solve the problem no matter where you are.
Other Considerations When Selecting an Accounting System
The accounting system you ultimately choose depends on your business’ unique needs. Your system should, of course, be capable of meeting your business’ most basic needs (such as invoicing) as well as tracking cash flow. From there, the robustness of the program you choose is up to you. For startups and small business, one of the most important things to keep in mind is selecting an accounting system that can grow with your business in the future.
Finally, you should, of course, consider the cost of the accounting system you choose, but only to a degree. Cheaper systems may seem like they offer the most value, but do they really fulfill the needs of your business? It’s likely that the pricier systems will be worth the investment, especially as your business grows.
Think about it – robust accounting programs drastically streamline the accounting process while eliminating the need for constant manual data entry. That means the time that would have been spent managing company finances the old-fashioned-way can instead be spent focusing on the growth of your business. Ultimately, a great accounting system allows you to operate your business proactively instead of reactively.
Need help selecting an accounting system?
If you’re still unsure about which accounting system is right for you and your business, the friendly and knowledgeable staff at Pine & Company CPAs is more than happy to help. We will not only help guide you through the selection process, we can even train you and your staff to get the most out of the program you choose.
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