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Choosing An Account Software

Things you should be familiar with even before the digital age, business owners keep track of everything using paper ledgers. Now a days, enterprises of all kinds, forms, and sizes utilize accounting software in keeping abreast on their revenues and expenditures, predicting future sales, managing their inventory, and recording important financial data. However, keeping their books up to date and overseeing financial transactions can tough and time consuming. Businesses must always bear in mind that proper bookkeeping translates to good financial judgment. On the other hand, poor bookkeeping results to lapses and mistakes that can immensely affect the business. Employing an effective accounting system that lets entrepreneurs identify their business’ strong points and vulnerabilities is a must.

Significance of Accounting Software

As a business owner, time is of utmost importance. Instead of focusing all your attention on managing your business, you may end up burning out from updating your finances and generating reports. A good accounting software should minimise the stress from keeping financial information up to date. When appropriately matched for your business and used properly and correctly, the right accounting software can do wonders.

Saves a lot of time

In contrast to manually updating books and using spreadsheet, accounting software will let you save a lot of time. The software itself slashes and gets rid off repetitious and superfluous data entries.

Performs other duties and tasks

Accounting software can perform various tasks efficiently. For instance, you can check your bank accounts and tax returns, automatically convert an order into a sales invoice, and update stock levels and records of your clients.

Manages the business’ cash flow

It is indispensable for all businesses to easily and efficiently manage its cash flow. An accounting software can consolidate financial transactions involving accounts receivable, accounts payable, and billing, thereby giving the organization an array of choices with regards to longstanding growth and progress, and strategies in generating more income.

Helps in making sound business decisions

An accounting software can give a brief summary and the current profile of your business. In addition, it provides comprehensive reports and other related information needed in creating and planning long-term strategies and campaigns.

Lays out the framework for development and progress

As the company grows and expands, the bookkeeping software also grows and expands, allowing more users and providing the essential types of reports and other business or financial data.

Factors to Consider When Choosing Your Accounting Software

Choosing the accounting software that best fit your business can be an arduous task. With a lot of choices available in the market, how can business owners figure out which of the accounting software that can readily be used is the right one for their company?

Listed here are several factors to identify and consider to assist business owners in making a well thought-out and strategic choice when investing in an accounting software.

What Your Business Needs Prior to purchasing an accounting software, business owners must identify first the nature of their business, its needs, and the accounting tasks that the software will execute. For instance, if your company generates millions of dollars yearly, your accounting needs will differ from an enterprise that makes less than $100,000 per annum. There are an array of choices of accounting software that are specifically designed for small- and medium-sized enterprises. You also need to consider the type of industry your business is engaged in. There are accounting software that are built for different business sectors, such as manufacturing and retail industries.

Types of Accounting Software

Generally, there are three main types of accounting software available in the market that can help businesses of all sizes with their accounting needs and concerns: cloud computing software, desktop accounting software, and server-based software.

➢Cloud Computing Software can be accessed via the Internet. In here, the software provider store and save the company’s data in the cloud. With this, businesses can access and use this information anytime and anywhere they want to. Examples of common cloud accounting packages are Xero, MYOB, Sassu and QuickBooks Online. Ideally.

➢Desktop and Server based Software is set up directly on your computer or a server. Unlike cloud computing software where you can use the company’s data on your own convenience, desktop accounting software can only be utilized, including the stored data, on the computer where it was installed.

Product Features

After fully realizing what your company explicitly needs, you have to make a list of accounting functions that you need from your software so that you can narrow down your choices. In making a decision, you can create two columns — the product features you want versus the product features you need. Also, take into account the software’s integrability with other business platforms, such as CRM or shopping cart software. Usually, majority of beginner’s software package includes listing and/or updating records of customers and suppliers, creating customer invoices and statements, and generating important financial reports and creditor reports. Accounting software features such as automation, tax preparation, payroll processing, mobile accessibility, multi-user access, quote and estimate creation, sales tracking, time tracking, and live bank feeds should be considered for they will surely help business owners save time and manage the company’s finances.

Customer Support

The accessibility and convenience of connecting to the software provider, other users, and professionals is imperative, especially for new product users since not all of their concerns and issues regarding the accounting software are addressed in the product guides and manuals. Opt for software providers that have large customer bases. These online communities comprised of interactive users, and sometimes employees who join in discussions, can help you resolve problems that are related to the accounting software.

Your Budget

Probably the last and most important determinant you have to take into account is your budget. When purchasing an accounting software, not only the product’s price should be weighed, but also the fees for product upgrade, licensing, and support. There are also other charges involved such as technical support fees that cover the set up and installation of the bookkeeping software, and costs for additional features like company branding and team functionalities. Auspiciously, most software providers offer free trial periods. With this, you can assess whether or not the product’s benefits outweigh the costs. This is also a great opportunity for you to accustom yourself with the software. Once you are settled and determined to purchase the accounting software of your choice, it wouldn’t hurt consulting a trusted accountant for advices, suggestions, or recommendations.

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Critical Accounting Mistakes That Bookkeepers Should Avoid

There are several common accounting errors committed by bookkeepers that can have an adverse effect upon the finances of a business. Sound financial management starts with a solid understanding of bookkeeping fundamentals. We will present you with some of the most commonly committed bookkeeping mistakes that may negatively impact the finances of your business.

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Co-mingling Personal And Business Finances

In order to accurately track your business finances, it is imperative that you separate all of your personal and business transactions, regardless of the size of your business. Separate business and personal financial accounts should be maintained and you should avoid depositing any funds from the business into your personal accounts. You should also implement a strategy for withdrawing funds from your business account to disseminate profits to investors and to provide funds for your personal expenses.

Erroneous Monthly Balance Sheet Reconciliation

Each month the balance sheet of your business must be reconciled so that you have an accurate assessment of the financial status of your business including its income, expenses, and inventory. This is one of the most fundamental accounting tasks, and it is sometimes overlooked, or not performed properly. It is important to perform this task accurately to avoid, and correct, any accounting errors that occur, so that they will not accumulate and lead to larger financial problems.

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Accurately Track Petty Cash

Many businesses do not keep proper account of petty cash, due to their relatively small amounts. However, petty cash can add up to a significant sum over time. A simple accounting system should be in place to log the amount of funds initially placed into the petty cash reserve and each employee who needs petty cash should submit a petty cash slip every time they require funds. The sum of these slips should balance with the original amount of money deposited in the petty cash reserve fund, prior to replenishing it.

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Cannot Accurately Track Cash Flow Versus Profit

At times, businesses are unable to properly distinguish between cash flow and profit. This can frequently occur when expenses and outstanding payments due are not accurately accounted for. For example, there may be a positive cash flow, but there may actually be a business loss, due to outstanding expenses that are unpaid. Similarly, a negative cash flow may be of a temporary nature, due to outstanding payments due from customers, and the business may actually be profitable.

Judicious Use Of Computerised Accounting Tools

Automation is beneficial, and quite necessary in the modern business world. However, computers can crash and data can be lost. This could devastate your business finances. Consequently, it is of the utmost importance that all of your financial records are backed up on a frequent basis. It will be beneficial if the data you backup is stored in a physical location that is separate from your business. This will safeguard your valuable corporate data should a disaster like a flood or fire destroy your records.

Reluctance To Retain A Bookkeeping Professional

Quite often small businesses owners choose to save money by performing bookkeeping tasks themselves. This can be a tedious and labour intensive task that can detract from focusing on the core aspects of a business and adequately serving the needs of customers. Furthermore, they are likely to commit bookkeeping errors, which will be more costly in the long run. Retaining a bookkeeping professional is likely to be cost-effective for most businesses in the long term.

Lack Of Automated Accounting Tools

Today, it is almost imperative that all businesses make use of automated accounting software. This software generally has numerous mechanisms in place that can avert fraud. All business records can be saved electronically several times a day and if any evidence of fraud takes place, there is a continuous backup of saved business records that can be used to pinpoint when and where the fraud took place.

Improper Employee Classification

Employees can have different classifications and there are different tax and accounting rules that apply to various employee classes. For example, there are hourly and salaried employees that must be handled differently. Furthermore, many Australian businesses employee workers from foreign countries that work remotely, to handle many tasks that involve electronic documents and computer software. These types of employees form another employee classification. Consequently, all of these employees must be properly categorised so that they are accounted for based on applicable Australian laws and the proper amount of income tax is deducted from their salaries.

Improper Deductions

Properly deducting payroll taxes from employees is imperative to avoid running afoul of government officials responsible for enforcing tax laws. Furthermore, other types of taxes, such as value added taxes (VAT) must be properly collected and accounted for. In addition, corporate taxes must be accounted for based upon the businesses’ profits. .
There may be other types of employee payroll deductions for various types of employee benefits offered by a business that require employee contribution as well.

Conclusion

Accurate and professional bookkeeping services are essential for the successful operation of any business. In addition, professional bookkeeping services can assist a business owner in successful business operation by providing them with data on revenue sources and expenses associated with their business. This service is also imperative for complying with all taxing authorities and maintaining your business records. We have outlined several bookkeeping errors that small business owners should be aware of in order to avert financial calamity.

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