Starting your own business has plenty of upsides, but it’s not always sunshine and roses—especially when it comes time to close the books. If you’ve ever struggled with accounting, you won’t be surprised to hear that 40% of small business owners say that taxes and bookkeeping are the worst part of owning a business, according to a survey by SCORE.
Luckily, the days of relying on manual bookkeeping are long gone. A lot of the frustration surrounding these tedious tasks can be relieved by using an accounting app. If you’re hesitant to make the switch, here are some of the ways in which doing so can boost your bottom line.
Save Time and Cut Payroll Costs
Bookkeeping is easily one of the biggest time-sucks involved in owning a business, and anything that requires hours of manual labor is draining your payroll budget as well. According to the SCORE survey, the majority of small business owners spend more than 40 hours and $1,000 per year on tax preparation.
If you’re still doing manual bookkeeping, switching to an accounting app will automate many of the tasks that overload your employees when it comes time to close the books or prepare your taxes. This change will free up their time to work on more high-level tasks that contribute to your business’s growth.
Produce More Accurate Tax Returns
In addition to saving you time on tax preparation, an accounting app helps prevent the human errors that are inevitable in manual bookkeeping. By tracking your expenses more accurately, accounting apps help you identify more deductible expenses and write-offs during tax season.
Errors in your tax returns don’t just prevent you from taking advantage of benefits like tax credits—questionable tax returns can also lead to costly penalties if you’re not careful. A good accounting app will help you avoid that, and it will also save you time if you are audited as you’ll be able to produce evidence to back up your returns instantaneously.
Understand Your Business Finances in Real-time
If you’re still doing manual bookkeeping, you’re probably bringing a lot of your financial records up-to-date at the end of the year. This practice means that for most of the year, the financial picture you have of your business isn’t completely up-to-date.
By taking advantage of an accounting app, you can do continuous accounting. What this means is that you’ll be able to see your business finances in real-time instead of guessing where you’re at based on outdated financials. You’ll be able to identify and tackle small financial issues long before they’ve grown into major problems. Tracking your cash flow in real-time also means having a clear sense of when you’ll get paid and how much money you’ll have when it comes time to pay the bills.
Automate and Track Customer Payments
Invoicing software is necessary for most small businesses. Even if you think you can handle doing it manually for now, there will come a point where you’ve grown too much to continue doing so effectively. Thankfully, most accounting apps do invoicing for you.
You’ll be able to create customized invoices and set up a recurring schedule with an accounting app. This feature ensures that your invoices go out on time. It will also keep track of your invoices, so you can easily see what’s paid, what’s unpaid, and what’s overdue. If you select an accounting app that allows customers to pay directly through the app, you’ll likely get paid faster as well.
Develop Improved Strategies for Growth
With an accounting app, you’ll have an array of profitable information at your fingertips. These apps can tell you which customers are generating the most profit for your business, where you can cut back on costs, or what the overall financial health of your business looks like at any given moment.
Having an accounting app that can give you up-to-date, accurate, and easy to read financial reports allows you to pinpoint problems and successes early on. This ability to monitor the successes and failures of business strategies is crucial to scaling your business.
Keep Your Finances in One Place and Access Them from Anywhere
Gone are the days of keeping valuable financial information in spreadsheets on a lone computer in the accounting department. With an accounting app, all of your business finances are centralized, and you can access them from anywhere. Upload invoices or input new expenses at any time.
There are plenty of options for effective, affordable accounting software, so there’s no excuse for continuing to weigh your business down with manual accounting processes.