Whether you’re launching a new small business or have been running one for years, you know how many different hats an owner has to wear.
Maybe you have a budget for hiring enough employees to delegate to. But if you don’t, you’re likely marketer, manager, customer service, and public relations.
You may also be playing the accountant. While you can certainly learn the roles that small business owners have to play, trying to learn how to be an accountant is no easy task.
Trying to do your manual accounting can not only be time-consuming and overwhelming, but also dangerous to your business. Not knowing what you’re doing or having time to commit to getting the job done can cause mistakes that could cost your business big.
But hiring a professional accountant often isn’t in the budget for small businesses.
Luckily, there’s a solution. Automated bookkeeping offers an affordable, reliable solution for businesses large and small.
Wary about handing off your business’ financial information to an automated system? You’re not alone in your fears.
That’s why we’re breaking down the dangers of traditional manual accounting, and the benefits of automated bookkeeping. Read on to learn what you need to know before you decide what type of accounting your business should be utilizing.
Issues with Manual Accounting
If you’ve already been running a business using traditional, manual accounting methods, you know how difficult it can be.
From the costs to the potential for mistakes, it can lead to a number of small and large messes that can hurt your bottom line, delay business, and more.
If you’re launching a new business, you may not realize the issues you’d be taking on by opting for traditional manual accounting. Here are just a few that you can expect.
Traditional Accounting is a Full-Time Job
No matter how small your business is, trying to perform accounting duties on your own is a mistake.
When you’re first launching, doing your own bookkeeping can seem easy. You have a set budget or your own personal funds. As you make purchases, put a downpayment on a storefront, and buy inventory, you subtract.
But are you also packing away your receipts and calculating tax deductions? If the answer is no, you may already be in trouble.
Traditional accounting is a full-time job. Professional accountants spend years studying the industry and have the degrees to show it. Trying to learn what it takes to manage a business’ accounts while running a the day-to-day will get overwhelming once the sales start rolling in.
If you’re not overwhelmed at first, you will be when tax time comes around. This can lead you to miss deadlines or important deductions or requirements.
Hiring an In-House Accountant Will Drain Your Budget
If you think the solution to the problems outlined above is to rush out and hire a professional accountant, think again. Unless your business is already pulling in huge profits, a full-time, in-house accountant likely isn’t in your budget.
The average yearly salary of a full-time accountant is more than $70,000. Hiring part-time or outsourcing to a firm will save you some money. But it may not give you access to the financial services your business needs to grow and succeed.
Making room in your budget for the traditional accounting you need will likely mean cutting back on other areas of your business. Otherwise, you’ll be reducing your profit margin. For a growing small business, this could mean a big cut in pay for the owner and any employees.
Cutting Corners Leads to Mistakes
Is a professional accountant not in your budget? You might be wondering whether you could cut corners to get the job done.
This could mean having your employees share accounting duties or hiring an inexperienced accountant. Or you may be thinking of trying to manage your business finances on your own. Any of these options are likely to put you at risk of costly mistakes.
If you’re relying on employees to perform accounting duties without any formal financial training, books could go unbalanced, totals could be miscalculated, or entire expenses could be left out.
Come tax time, this could put you at risk of trouble with the IRS. Every year, businesses in the U.S. are hit with more than $7 billion in IRS penalties.
Even seemingly small mistakes can add up to big trouble, especially if they aren’t caught right away.
Lack of Security
Keeping your records in paper ledgers or even basic computer programs could be putting your company at risk.
Each year, 43 percent of cyber attacks target small businesses. These attacks put customer, employee, and sensitive business information at risk.
Whether you deal with sensitive information from clients or just names and credit card numbers, one attack could spell the end of your business’ good reputation.
Benefits of Automated Bookkeeping
Rather than putting your business at risk or cutting into your profits by hiring a professional accountant, you need another solution.
That solution is automated bookkeeping.
Automated bookkeeping eliminates the risk of human error, saves your business money, and reduces your risk of succumbing to dangerous cyber attacks. Keep reading to learn more.
Your Books are Always Ready for Tax Time
If you’ve ever struggled to catch up with your record-keeping at tax time, or if you’ve ever relied on a contracted accountant who was busy preparing dozens of other accounts, you know how stressful that April deadline can be.
Scrambling to track down expense sheets, receipts, and trying to figure out what you can deduct at the last minute is likely to lead to mistakes.
Automated bookkeeping eliminates this mad rush to the finish line.
Automated bookkeeping is updated as your business operates. With real-time accounting taking place every second you’re in operation, you never have to worry about putting in information after transactions have happened.
Your automated bookkeeping system will also help you figure out what is deductible and what isn’t, giving you an idea of what you’ll owe on an expense come tax time, as soon as the transaction is entered.
Automation makes it easy to ensure that your business is always in compliance with government tax regulations.
Unlimited Access to Your Financial Information
When you choose to use paper ledgers or manual computer programs, you often only have access to your business’ financial information when you’re in the office.
But if you travel often for work (or pleasure) or are able to work remotely, you need access to this information from wherever you are. Automated bookkeeping allows you to check in on your accounts from anywhere, anytime.
This also gives you unlimited copies of your financial information. You’ll no longer have to worry about ledgers disappearing after a meeting or getting misplaced in an office move.
No Risk of Mistakes
Computers don’t make mistakes. When you’re relying on automated bookkeeping, you won’t have to worry about totals getting misprinted or expenses miscalculated.
Your automated system will never round up or down, miscount, or make other mistakes that are common when relying on humans to input and calculate the same information.
The ability to trust your financial records without having to double check them will save you time and stress.
The security risk of paper ledgers or manual computer systems goes away when you opt for automated bookkeeping.
If you choose the right software provider, your automated system will feature advanced safety measures that will help protect you from cyber attacks.
You’ll also have more control over who within your business or office has access to your financial information. No more risk of employees sneaking a peek at the books when they aren’t authorized to do so!
An automated accounting system will drastically reduce the amount of time it takes you to handle your business’ finances.
No more spending hours balancing books or paying an employee to do so.
Instead, you’ll set up your software and let it work for you. When purchases can’t be linked directly to your automated system, you can easily input them and the system will do the rest.
Choosing an Automated Bookkeeping Software
Now that you know the hazards of choosing traditional manual accounting and the benefits of automated solutions, it’s time to make your choice.
If you’ve decided that automated bookkeeping is the right option for your business, you need to find the right software option for the job.
With so many options out there, making your choice can seem like a challenge. But the available systems are far from equal in quality and return on investment.
The last thing you want to do is choose an overcomplicated system with extras that you’ll pay big for. You’ll end up spending so much time learning to use the new system that you could have just handled your own accounting (and we’ve already talked about what a bad idea that is!)
Instead, you need a simplified solution that still offers the automated tasks you need to track financial information, ensure compliance, pay bills, and other regular business functions.
If you’re ready to learn more about how our simplified interface and a wide range of functions could help improve your business’ accounting, request a demo today!