Still Doing Your Accounting Manually? You’re Losing Money

June 2, 2016

Millions of small businesses still do their accounting work on paper. If you’re one of them, your profits will suffer.

You’ve probably considered moving your financial bookkeeping to the cloud before. So many businesses have done so, and you’ve undoubtedly heard about the merits of joining them. They save time. They simplify transactions and help you find data quickly. They give you instant insight on your fiscal health through reports and other tools. They let you focus on building your business instead of chasing debits and credits.

But you’ve stuck with your manual accounting system because:MST blog 0616 01 image 1

  • It’s familiar.
  • It seems easier than learning a new system.
  • You don’t have time to make the transition.
  • You worry about data security.

All are valid reasons for hesitating. But you’re focusing on the short-term pain part and neglecting to really consider the long-term gains.

If you haven’t explored the world of cloud-based accounting for a while, you might be surprised at how far it’s come in the last few years. Full-featured, double-entry bookkeeping sites like QuickBooks Online have taken on so much functionality and flexibility that they’re almost as powerful as their desktop counterparts. They can help you save money in numerous ways by, for example:

  • Minimizing staff time needed for accounting,
  • Ensuring that bills are paid (avoiding late fees) and invoices sent on time and tracked (keeping incoming revenue flowing in),
  • Helping you analyze sales (guiding you to smart inventory-buying decisions), and,
  • Calculating and submitting payroll taxes and filings (preventing IRS penalties).

Not every business needs all of those tools. So there are countless other, simpler websites that only support a handful of financial tasks. These include:

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Expenses. Are you losing money because it’s too difficult to round up all of your receipts and claim them as business expenses on your income tax returns? Some sites provide simple tracking tools that make it easy to enter and categorize transactions – even mark them as billable so that you’re always reimbursed by the responsible parties. There are multiple ways to move expense data into the app, like scanning, emailing, or taking pictures of receipts.

Estimated taxes. Whether or not you pay your estimated taxes quarterly, the total tax that you owe will catch up to you when you file your annual return. If you’ve underpaid your four-times-a-year obligation, you’ll lose money by paying a penalty.

Links to bank accounts. Maybe you’re keeping an eye on your account balances by calling the bank to get them occasionally and reconciling your paper statements when they come in. You might even be doing online banking at your financial institution’s site. A better way is to use a cloud-based site that keeps your transactions updated in an online register. This way, you see exactly what income and expenses have cleared the bank. Reconciliation is much easier, too.  You’ll save money on bank fees related to  overdrawn accounts.

MST blog 0616 01 image 3When you can see exactly what you’re making and spending, you can also pinpoint areas where you’re over-spending and make corrections.

Mobile. These cloud-based accounting applications come with mobile apps that you can update when you’re out of the office. You may be able to prevent a financial problem that would otherwise not have been noticed until it was too late.

You will have to pay money to save money, of course, since these sites have monthly subscription fees. But they’re affordable. And their cost can be much cheaper than even one serious accounting error that you could have avoided.

Stock images courtesy of FreeDigitalPhotos.net

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