This is a question most small business owners think about. Is the cost of purchasing and time spent learning software worth it? The short answer is yes.
Whether you are an individual, partnership, or company, there are numerous benefits to using accounting software.
The first great benefit to a busy business owner is that accounting software saves you an enormous amount of time and energy. Manually entering information into spreadsheets, keeping track of invoices and bills, and calculating payroll can take up many hours that could be better spent on focusing on the day to day running of your business.
With accounting software, you can easily generate itemised bills, financial reports, pay your employees, or take a snapshot of how well your business is doing in real time.
Popular accounting software are Xero, MYOB, Reckon, Quickbbooks, and Netsuite, but there are also numerous others.
Manual data entry is very susceptible to errors. It is very easy to put a wrong number or date, or to forget an entry. Even minor errors will mean your books won’t balance and you can spend a lot of valuable time trying to figure out where the problem is. It is also very easy to forget when the payment of suppliers is due, or for unpaid invoices to slip by unnoticed. Accounting software stores everything electronically and data is far easier to locate and cross-check.
You can view a quick overview of accounts payable and receivable, or examine finer details of which bills have been paid and which are outstanding. You can group them by date, customer, or other criteria you choose.
Software such as Xero can even automatically chase outstanding payments with automated reminders. You can set how often reminders are sent out, and with a few clicks, you can check if your customer has seen the invoice and if it has been paid. Accounting software can also sync with your bank accounts so you can easily check any transactions owing.
With the click of a button, you can also analyse the state of your business’s finances with real time data. You can generate reports, check balance sheet summaries, and view accounts receivable and payable at any given time to monitor how your business is doing. With MYOB you can create reports that span years, quarters or weeks or specific date ranges so you can spot trends. This information will help you to make informed decisions about any changes you may need to make in the running of your business. Noticing trends early is a great asset.
You can also monitor payroll and tax calculations. Because accounting software is set up to do many of the necessary calculations for you, you can be confident that your financial data will also be much more accurate than if you were using spreadsheets or paper.
Data Storage & Mobility
Most accounting software is cloud-based, so all of your data is stored in the cloud. Even if you lost a paper invoice, you still have a record of it. Because all the data is stored electronically, you can easily locate invoices and bills with a search function, so if there are any disputes with suppliers or customers they can be settled very quickly and easily.
Cloud storage is a particularly handy feature for tradies, caterers, landscapers, and others who are mobile and work in multiple locations. You can access client details, expenses, or invoice information from your phone or tablet at any time from any location. You can even send invoices directly from your mobile device. The sooner invoices are sent, the earlier you receive payment and the healthier your cash flow is.
For partnerships or businesses with more staff, access to information on the cloud can also be shared with others, as applicable.
Your accountant or bookkeeper can also be granted access to your software which saves you time and costs by reducing the number of appointments you need to make. With online bookkeeping your bookkeeper can get what they need quickly and can generate reports directly from the software. High-quality accounting software such as Xero, MYOB, Netsuite etc. also has high levels of security such as two-step authentication which protect your financial information. It is far more secure than sending email attachments.
Having cloud-based accounting software will also save you a lot of time and stress if the ATO decides to audit your business. Accounting software automatically provides an audit trail and everything you need is at your fingertips. The software tracks all changes to a client’s books, what the changes were when they were made, and even who made them.
As your business grows, accounting software will easily handle the growing complexity of your business. For example, as you take on more employees you can utilise more of the payroll features which will keep track of various awards and rates, PAYG and other obligations. The increase in bills and invoices will also be handled easily.
Good accounting software such as Xero and MYOB will even handle multiple currencies, so if you have overseas suppliers or customers, your software will save you time by working out exchange rates for you.
Every business must report to the Australian Tax Office (ATO). If you are registered for GST, there are numerous financial reports which must be submitted, and your books must balance.
Single Touch Payroll (STP) is mandatory for most employers to report tax and super information (for details see https://www.ato.gov.au/Business/Single-Touch-Payroll/STP-reporting-options/
). This means each time you pay an employee, you are required to send the employees’ payroll information such as salaries and wages, PAYG and super to the ATO. Good accounting software has an STP feature so you will be in compliance.
The ATO also requires businesses to submit a business activity statement (BAS) monthly, quarterly or annually, and an annual PAYG withholding report. You must also submit an annual GST return if you are eligible and pay Superannuation Guarantee charges (SGC) if necessary.
Australian taxation is complex and there is no doubt that fulfilling your taxation requirements is far easier with accounting software. Software such as Xero and MYOB are linked electronically to the ATO and tax tables are automatically updated. PAYG, GST and BAS statements can all be created directly from your software and be sent directly to the ATO.
Accounting software will free up your time and also the time your bookkeeper or accountant needs to spend on your books. The software will handle invoicing, billing, accounts, payroll, and much more. You can monitor the health of your business accurately and whenever you want, and you will have peace of mind knowing that your books are accurate and you are compliant and up to date with your reporting and taxation obligations.