Small business owners know success is all about satisfying customers and increasing revenue. However, some of the most essential elements of business ownership involve solid bookkeeping, which is made even easier with computer software developed specifically for modern business. Converting a pen-and-paper system to online accounting software makes it easier to please clients, produce government reports and track customer activity.
Tax Reporting and Audit Preparation
Audits are a part of doing business for many entrepreneurs. Although it may be a nerve-wracking and stressful process, electronic record-keeping make the process more efficient. According to tax expert Bonnie Lee, audits tend to be shorter and less detailed when the IRS has access to computerized records. Even if business owners do not anticipate an audit, they all must file taxes annually, which is more expedient with well-maintained financial books.
Insight Into Cash Flow and Expenses
In days past, small business owners would track sales in a ledger and deduct expenses as they were incurred. With accounting software, it is quicker and more efficient to create monthly reports and to compile an historical snapshot of the business’s peaks and flows. Seasonal businesses benefit from comparison to the same time period from the previous year, for example, than earlier months in the year.
Keeping up to date with the records of a business’s financial institution is a time-consuming but necessary step to ensure accuracy. Automated accounting software allows for almost immediate bank statement reconciliation, as many institutions allow account holders to download their transaction information into their own home software.
Communication With Customers and Vendors
Owners produce invoices and pay bills with accounting software, reducing delays in payment requests and maintaining positive relationships with suppliers. In addition, more complicated accounting systems handle all aspects of client communication, including “check-in” and direct marketing emails. Automating some aspects of the relationships with those who supply product to, and buy products from, the business saves owners time while keeping their network intact.
Planning and Managing Inventory
Sophisticated accounting software tracks and manages inventory as it is sold. This provides for more accurate customer conversations when something appears to be out of stock. Owners know whether they need to issue a special order or whether there is more product already on its way. Since inventory is a substantial asset to many businesses, knowing how much is on hand at any one time largely determines the current value of the company.
Customer Acquisition and Retention
Marketing is essential for every small business. In particular for businesses that sell online or in bulk, with either online invoices or with a lengthy history of reorders, knowing what customers buy repeatedly helps in advertising efforts. Using the customer information in accounting software, owners can determine how clients buy and alert them to upcoming sales to encourage them to buy more.
When small business owners start a new enterprise, for example when an organic food market starts a new business making fruit pastries, they can use their existing customer information to alert them to the new offerings in which they may have interest.
The primary benefit of accounting software is its efficiency. It saves business owners time they could otherwise spend making product or promoting their business. It provides an extra layer of protection from government taxes and levies because records are up to date and accurate, taxes are paid on time, and there is little need for adjustment in the future.