Accounting is the process in which an individual (or an accountant) systematically tracks an individual’s or company’s financial information.
The information is measured, evaluated and communicated in the form of financial reports. Those reports are used by individuals to aid in making strategic economic decisions for themselves or their business.
While simple to define, accounting can be a complicated process and should be taken seriously. Proper production and analyzation of financial reporting is an integral component to a profitable business.
The data that goes into your financial statements are calculated from your business metrics, such as total sales and monthly expenses.
Learn more about accounting:
- Small business accounting: 5 steps to start your books
- Know your tax dates and IRS forms with our calendar
- Download your free quick start guide to bookkeeping
- How to boss your cash flow: 5 things to do right now
- How to choose an accountant for your small business
Accounting software vs spreadsheets
It is not uncommon for a small business owner to start tracking their business finances with a spreadsheet. Or, perhaps more accurately, a series of spreadsheets.
However, as your finances become more complex, you’ll quickly discover spreadsheets don’t grow well with your business. In a spreadsheet every financial transaction must be updated manually. This not only takes up time, it also increase the likelihood of data errors.
Manual data entry also means you lack a real-time view of your business finances.
Benefits of using accounting software for your business
Simple to use and get started
If you can use a spreadsheet you can use accounting software. Modern small business accounting software is quick to set-up and offers a user-friendly design.
Save time with automation
Accounting software lets you reduce the time you spend on paperwork by automating common accounting tasks.
Get paid faster
Accounting software helps you speed up your invoicing process by enabling you to create, edit, send, and track your invoices from anywhere, at any time.
Cloud software = real-time data with anywhere, anytime access
With cloud accounting software you can view, update, and manage your accounts from any location, at any time. Accounting software also makes it easier to share information with your accountant, bookkeeper, or team.
As a small business owner, it’s likely the two times of year that you will talk to your accountant or bookkeeper the most are tax season and year-end. Using cloud accounting software helps to ensure all your invoices, receipts, and statements are neatly filed and easily accessible to your accountant or bookkeeper.