Accounting software can assist you in tracking the flow of money into and out of your accounts, making it easier to manage your company's finances. Here's all you need to know about accounting software's features, bookkeeping basics and advantages.
Accounting software is a tool that allows you to track the money flow in your business and analyze its financial situation. In addition, it assists business organization's ensuring their accounts are accurate and saves time while maintaining them.
Basic accounting functionality should be included in all accounting software, such as reconciliation, accounts payable, general ledgers, financial statements etc.
A business needs to keep track of its income and expenditure. Accounting software offers these options to keep track of daily financial transactions.
These features are essential to keep track of working hours and managing employees' salaries in a timely and accurate manner. Accounting software allows businesses to track time spent on projects and converts time based on hourly rates directly into invoices.
Another helpful feature for a business that uses other systems. The integration allows businesses to make use of accounting software with other software, such as payment gateway integration.
A payment gateway integration allows businesses to collect payments online from customers making the payment process easier from both ends and thus increasing customer satisfaction.
This automates the invoice process, such as sending out an invoice, sending notifications to customers to pay their bills etc.
Business can link their bank accounts to accounting software. This allows companies to make financial transactions much more convenient and can easily export and import bank statements. Apart from that, with accounting software, a business can use automatic bank feeds and match bank statement reconciliation.
Bookkeeping is an essential part of your company's finances and can impact the growth of your small business. It covers a wide range of tasks, including basic data entry on the accounting software to communicating with certified public accountants, and acts as the core of your financial and accounting activities.
Bookkeeping is the procedure of recording the financial transactions of a business. Each financial transaction a business makes is recorded based on supporting documents such as invoices, bills, payable orders, money receipts etc.
With bookkeeping software, tracking and submitting relevant information to the government is more effortless. Apart from that, there will be penalties and fines if you submit incorrect reporting or fail to submit a report.
With adequately organized financial information, you can quickly review your income and expenses and make your decision process more accessible such as bank loans, and investments, creating a roadmap of future income and expenses for your business.
You must file for taxes at the end of every fiscal year. With up-to-date bookkeeping in place, your financial information will be ready, and the calculation of the taxes will be less hassle.
Properly organized records can help you find financial errors. On top of that, with regularly organized data, you can find crucial financial information you desperately need in no time.
Regular bookkeeping can give you an overall idea about your business's whereabouts, such as sales, operation cost, cash flow etc.
Read More: Accounting Software vs Bookkeeping Software vs Billing Software
First, we will discuss bookkeeping accounts, then bookkeeping accounting methods, and finally, we will learn bookkeeping entry systems.
Bookkeeping Accounts:
Assets are the things your business owns, such as cash, inventory, properties, equipment, etc.
Liabilities are debts owed by the business, such as accounts payable, bank loans etc.
Revenues or Incomes that you earned from your business operation by selling products or services you offer.
Monies that you spend to keep running your business operation such as salaries, utility bills etc.
When your business liabilities are subtracted from your business assets, you have equity, reflecting your company ownership.
In a cash-based method, the business does not record the transaction until the money has been actually paid.
In an accrual-based method, every transaction is recorded immediately, even if there's no cash exchange involved.
This is a straightforward system suitable for small businesses. In this system, income and expenses are recorded at once upon occurrence.
This system records all transactions twice as debit and credit to balance the book. Though this system is a bit complex, it can prevent errors.
Here are some of the most significant ways accounting software can help your organization.
⇨ Monitoring and Controlling of Your Finances
Accounting software organizes and saves your financial data in one secured cloud server. It provides a complete overview of your business performance and can suggest action based on analyzed data.
⇨ Reconcile bank statements
Account software can connect with your bank accounts, enabling you to reconcile your bank statement automatically with one mouse tap.
⇨ Tax Preparation
Tax calculation can be a complex task while adhering to compliance. Accounting software can easily take care of tax calculations. The software makes the rigorous process easier by keeping all the information in one place and can submit the return file without using a third-party app.
⇨ Inventory Management
For a retail or e-commerce business, keeping track of the inventory and replenishing stock before it runs out is essential. Accounting software can automate this process and make your life easier.
⇨ Reporting
Using accounting software, you can easily collect data and prepare income statements, cash flow statements, and balance sheets.
⇨ Data Backup and Protection
Accounting software comes with a cloud backup feature. Which enables users to back up their accounting data into a secured cloud server and prevents data loss. This feature also allows users to access data from any time and anywhere.
Traditional bookkeeping is time-consuming. It's mandatory for every business to digitize its bookkeeping system. Experts suggest that accounting software should be one of the first purchases a new business makes.