When a business is just starting, the owner is trying to juggle a lot of different things. One of the things that can be pushed to the background is the accounting. Many times, business owners are really good at running their business, but they are not as comfortable with the accounting part. A good accounting system can give the owner a lot of good and critical information.
WHAT TYPE OF BUSINESS WOULD BENEFIT FROM A GOOD ACCOUNTING PROGRAM?
- I think all businesses would benefit, but maybe I am biased.
- Some business owners look at the checkbook and that is how they determine how well the business is doing.
- But as the business grows and the timing of sales and when a customer pays gets longer, a business needs an accounting system to keep everything straight.
ARE MOST OF THE SOFTWARE PACKAGES USER-FRIENDLY?
- They are a lot better than they used to be.
- The software developers have really worked hard on making it as easy as possible.
- Even downloading transactions directly from the bank so the owner does not need to manually enter them.
WHAT DOES THE BUSINESS OWNER NEED TO DO?
- For many business owners, if they can enter deposits and write checks from the software, which will get them 90% there.
- Then they can do bank reconciliations in the software.
- Finally, as the business grows (or the business owner gets more comfortable with the software), adding things like invoices, estimates and payables will help the business owner manage cash flow.
ONCE THE DATA IS IN – WHAT CAN THE BUSINESS OWNER DO WITH IT?
- I think the report capabilities of the software can provide critical information to the owner.
- Most accounting software packages can produce a balance sheet and income statement.
MAYBE THIS IS A GOOD CONVERSATION FOR NEXT WEEK, BUT WHAT KIND OF INFORMATION CAN AN OWNER GET FROM THE FINANCIAL STATEMENTS?
- I think many small business owners do not know how to read a balance sheet or an income statement or how they provide great information.
- We can talk about that next week.
Be sure to talk to a tax professional if you have any questions about Accounting Software Packages.
As a partner, I have thorough experience providing tax services to individuals, privately held businesses, nonprofit entities and estates and trusts. I also provide compilation and review services.
