The National Small Business Association in its 2017 Small Business Taxation Survey, discovered that of the 950 small businesses surveyed, 33% (313 companies), spend more than 1,393.6 hours each year on federal taxes related to payroll, self-employment or other business-related taxes, filing reports, working with accountants, etc. While this number is somewhat specific to taxation, there are many components of running a business related to this topic. More importantly 20% of all businesses fail within the first two years because they lack effective money management and bookkeeping.
While the major component is accounting, a few of the sub-components that can generate the hours spent on federal taxes are:
a) Invoices,
b) Expenses,
c) Operations,
d) Payroll, and
e) Inventory
With controlling the major component of accounting, a small business owner can possibly gain a minimum of 10 hours per week just by converting to an automated method of accounting. Accounting applications are divided into single user (freelance), single or multi user small business, or enterprise level.
Single User/Freelancer*
FreshBooks
QuickBooks Online
QuickBooks Self-Employed
Billy
GoDaddy Bookkeeping
Wave
Single or Multi-User Small Business*
QuickBooks Online
Kashoo
Sage Peachtree
Sage Masterbuilder
Sage Timberline
WorkingPoint
Xero
Zoho Books
Enterprise Level*
Acumatica
AccountMate
NetSuite OneWorld
QuickBooks Desktop Enterprise
Sage Accpac
Sage Mas
Sage X3
*Denotes this list is a partial list of the products on the market.
Financial management is complicated to say the least! The simplest purpose of any accounting software is to determine the amount of money in and money out to possibly prevent the business from failing! Using a manual approach is time-consuming and complicated enough. With manual processes you lack a simple method for recording and storing all the receipts for the money out aspect while tracking what or how you are selling a product or service via cash, check, credit card or credit affects the money in and understanding the financial position of the business (is there a profit).
However, you can gain back a minimum 10 hours of time each week with a properly setup accounting system that feeds your bank and credit card information into the accounting system, automatically categorize each transaction for you and which also provides a profit and loss report with a click of the button. You can see where you have been and make plans for the future. You can drill down on each category, income or expense, if the number is larger than expected to get an immediate idea of what’s changed.
Selecting the correct accounting software for your business is critical and dependent upon many factors. Of the twenty (20) products we listed, we personally prefer Intuit’s QuickBooks Online software because you don’t have to be an accounting expert to set it up, they provide a product at multiple price points for various business types, they have support staff to assist you Monday through Saturday, and they provide free trials for at least a 30-day period.
Still trying to determine a direction? Answer these three questions first:
a) Do you have the time to learn and manage the accounting system?
b) Are you able to keep up-to-date on new tax laws in order to avoid legal troubles?
c) Is your time best spent managing the accounting system?
Give us a call so we can assist you with identifying the best choice!
Sources: NSBA.biz SBA.gov Intuit.com PCmag.com