What Are the Functions of Accounting Software Programs for Small Business?
The impact of small business in America isn't small. Small businesses represent 54 percent of national sales, provide 55 percent of all jobs and account for 40 percent of all retail sales, according to the U.S. Small Business Administration. One of the reasons a small business fails is because of the lack of correct accounting practices. To stay in business and succeed as a small business owner, you need the functions found in accounting software programs.
The old method of using manual ledgers to document business financial activity is complicated, cumbersome and slow. Unless you've been trained in accounting, you won't know how to do it. Accounting software programs automate financial transactions. With software tailored to your business, you can create multiple documents from a single entry. When you create an invoice, for example, it might also create a pick list for the person who ships the products to the customer. It can also add automatic calculations for shipping and taxes.
Accounting software adds a layer of security to your business financial data. You can assign users with their own passwords to specific areas of accounting. If you have one person who handles invoices, another who processes expenses and yet another who manages payroll, each person can only access the area assigned to him. Accounting software secures your financial data from those who should not be accessing it.
Good accounting software programs provide internal audit trails. This allows one person to vet the transactions created by someone else. An audit trail also makes it easy to correct transactions by detailing every step of the transaction. Some accounting software provides this function with the capability of turning it on or off.
The report function of accounting software can give you an eagle eye's view of your business. Report functions are often customizable in accounting software; they can summarize data or be detailed, depending on your needs. Reports on business data is critical when you need to make important decisions. Accounting reports let you know how much you might have to pay in taxes or what you owe to other businesses.
Accounting software also helps you analyze your business position. By reviewing the information gleaned from your accounting software, you can analyze a product's profitability, plan for growth, prepare annual budgets, understand the costs of running your business and make adjustments to your business plan as needed.