We all know the importance of maintaining even a single transaction record in business. It can help the business owner in analyzing the company’s overall performance; hence, the owner can also plan future strategies accordingly.
Need Of Accounting Software
Automated Accounting software can help in this scenario. Nowadays, it has become the first necessity for small businesses and emerging startups to survive in the market. Just imagine, if they waste their time managing all accounts manually, instead of utilizing the time to plan new strategies to make it a successful business. Accounting software has emerged as a boon for all the finance companies and agencies, which were reliable on those heavyweight books to manage their day to day accounts.
Not only was it a cumbersome task, but also very tiring and frustrating. Suppose, if we want to look at the report that was written say a month ago, then what? Nothing, start flipping almost thirty pages back, search for the day and date, note down the account and keep that heavyweight book down. Exciting job, isn’t it? That would be the most frustrating job ever. Hence, the system that has reduced this sort of frustration and automated the manual work for accountants out there is none other than the accounting software available in the market.
Also, it eliminates the mistakes that can happen while entering the account details manually. Also, the load of maintaining heavyweight books for a more extended period is decreased while using automated accounting software. Again, data security comes as the main concern for businesses.
What if a file or a book is lost? Wouldn’t it happen that the companies’ financial aspects be leaked? Well, accounting software comes in handy for security purposes too.
Not only for finance companies and agencies, but it has also been helpful for various other companies in almost all the sectors, like the companies managing a large number of employees, their tax filings, salary breakdowns with many allowances, etc. Hence, whether it is a typical grocery shop or a multinational company, accounting software is being used everywhere.
Now you would say if spreadsheets can work as our accountants, why spend on licensed accounting software? Just think, will you be able to file your income tax using spreadsheets? Will you be able to manage your bank transactions? No! You cannot do that! Still, you need to rely on manual work if you go for spreadsheets. Hence, accounting software should be a priority for businesses.
Now let’s discuss what you should know to access accounting software?
Firstly, you should have the basic knowledge of various financial statements like balance sheets, an excellent decisive factor for accounting methodology that is- cash or accrual, should be able to maintain personal as well as professional accounts separately, knowledge for tax liabilities, performing audits regularly, validating the records stored till present with bank statements every month, three months, six months or a year.
Accounting Software Advantages
Some of the significant advantages of accounting software include its user-friendliness, more straightforward and comprehensive report generation, improvement in financial performances, precise and faster, time saver for generating invoices, centralized system and hence can be distributed over several users, more accessible data entry, lesser operational costs, improved decision making factors, deductions, income tax calculations, generation of payslips, identification of false and wasteful expenses, etc.
Now, Let’s discuss each advantage of the accounting software in detail.
- Managing records: The accounting software not only manages the financial numbers related to sales, profit-loss statements, etc. but also manages all the files of your client like their contact details, how much we have spent or earned from that client, how many products have been sold or purchased, etc. Hence the accounting software can also act as an overall database for the businesses.
- Check to print: This can also be done through accounting software. Just fill in the details of the customer account number, name, and auto-increment the check series, and your work is done! This system is widely used in all banks.
- 1099 form: It is a type of a document for internal revenue service which can report the various sources of income that you receive apart from your salary from your actual job. This type of data can also be managed by accounting software.
- Payment calculation: This feature is widely used in banks and finance companies where people borrow money on interest by taking loans. The interest is levied on the principal amount, compounded every month, or pure curiosity, counted every year. This makes a lot of calculations easier.
- Alert for Duplicity of Data: If by mistake we enter the same transaction twice, which may include the amount for sale, date, day and time, the system will give us an alert message that there is a duplicity of data as the money can never be transacted on the same time without even a difference of a second!
- Advanced Payment Scheduling: You can also set reminders for scheduling your payments so that there cannot be any delay in cash, and we can be saved from paying for the penalties.
- Invoice Creation: You can create invoices from the system by choosing one from the multiple layouts for the invoice available in the order.
- Profit Loss statements: The data for the purchase cost for the item, selling price, the profit gained or loss incurred percentage of profit/loss, these all things can be recorded in the software and hence the analysis of the turnover of the business by month or year can be done quickly and efficiently.
- Tax Calculations: Income tax, sales tax, Goods and Services Tax (GST), etc. can easily be calculated using the software from the available data.
- Stock Alerts: From the data provided for the purchase stock, it can also alert when the stock is about to be sold out.
Nowadays, there has been substantial up-gradation in accounting software based on different trends and technologies, like data encryption and biometrics for authentication of data access, blockchain for the systematic arrangement of data, transferring the data to the cloud from desktop-based software to mobile apps, machine learning systems for smooth data processing, etc.
So in this way, accounting software has proved to be hugely beneficial for all types of businesses.