THE IMPORTANCE OF USING AN ACCOUNTING SYSTEM
One of the most important factors for a small business’ financial health is to use an accounting system. Accounting systems track revenue, expenses and produce financial statements. They can save a business owner valuable time and money when compared to the alternatives.
Do you use Excel? While Excel might seem like the simple solution, it really isn’t the best use of your time. Why spend your time using a completely manual process when you could be using an automated one?
Are you a shoebox client? Are you not using any type of method during the year to track income and expenses? Do you just toss your receipts in a box and forget about them until tax time? Do you rely on your tax preparer to sort through your paperwork and determine your income and expenses right before the dreaded tax filing deadline? If this describes you, how do you know the performance of your business without proper and routine tracking of sales?
Your time is the most valuable asset your business has. Use it wisely to grow your business.
The advantages to using an accounting system are numerous. I touch on some of the main advantages below.
- Tracking Income
Entering your financial information into an accounting system will automatically track all income. You will know what customers have paid and what invoices are outstanding. Knowing on a regular basis what amounts are owed to you can help you be proactive in collecting past due amounts.
- Tracking Expenses
You will know what vendors have been paid and what items are open. Having this information can aid you in paying bills on time and avoiding late fees and penalties.
- Financial Statements
An automated financial system allows for financial statements and activity reports to be generated quickly, and accurately. Your financials are critical to assessing the health of your business. If you are a shoebox client, reports are not possible during the year. As well, if you are using Excel you will need to manually prepare reports.
Having all of your information located nicely within an accounting system can help you save time and money, prepare your taxes and increase your bottom line. A business can’t truly know their financial outcomes without proper tracking. If you are using Excel or are a shoebox client, I urge you to think about moving to an automated system. Your time is the most valuable asset your business has. Use it wisely to grow your business.
One final point, as important as having and using an accounting system is, it is equally important to ensure it is managed properly. If you are unsure of how to use an accounting system or how to accurately account for transactions you should seek professional help. Too many business owners try to do it themselves and find themselves owing penalties and interest on incorrectly filed sales and income taxes.
If you would like to discuss how to get setup on an accounting system please contact us. We handle system set ups, training and routine review for accuracy.
Copyright 2014 Christi Rains, Alpha Omega Consulting & Bookkeeping, LLC