How to Correctly Use Accounting Software for Your Startup

Many small businesses in the U.S. continue to move their services online, yet 18% of them still don’t use accounting software.

A significant number of those who already use an accounting software even do not make most out of it. On the other hand, in 2020 accounting software has been proven to improve many parts of accounting.

These improvements include reducing costs, improving speed, and reducing frustration, thus it can significantly improve the profitability of the business if used correctly.

Why, then, are 18% of U.S. small businesses not using it!?

Probably because a lot of people still don’t know the best ways to use accounting software, they are hesitant when it comes to paradigm shift!

If you are a solopreneur or a small business owner who is not yet using an accounting software, this article will surely guide you through the process of using one at optimum!

Using an Accounting Software that Works

With so many small business accounting software options available, it can be hard to find your best match.

Larger companies may need accounting software that can handle bigger transactions. Meanwhile, companies looking to cut start-up costs might be better choosing something more affordable. 

You need to find and use accounting software that works for your specific business. Its no use getting software that has been designed for a business with 200+ employees if you only have 2. 

When searching for an accounting software for your small business, consider the following factors:

  • Size of your organization
  • Total output/Sales Volume/Number of Customers
  • Number of Products/Services
  • Taxation and other requirements

Keep in mind, this software can’t do everything for you. It would be wise to brush up on at least the basics of accounting before you begin trying to manage your accounts. Or, take the shortcut and hire an accountant. 

Once you or someone you know is aware of at least the basics of accounting, it’s time to find your software and put it to use.

As a general rule, you want to use “accounting for internal-use software.” This is instead of “accounting software for personal use.”

Some examples of accounting software include QuickBooks and Xero. They both offer free trials to new customers. But, there are tons of other options to consider too, like Zoho Books and Wave Accounting.

Not Sure What Software to Choose?

You’ll want to base this decision on three key requirements. These are:

  • Ease of use
  • Available features
  • And the likelihood the software will be updated regularly

Select software that works for your needs right now, but has the potential to grow alongside your business. That way, you’ll be able to use the same system 5, 10, even 20 years from now. 

Don’t forget to take advantage of free trial periods. If something isn’t working for you, you can scrap it during a trial period at no cost and try something else.

So You’ve Chosen Your Software: Now What?

You’ve chosen the accounting software best suited to your business; now comes the tricky part. You need to know how to use your accounting software properly and make use of every feature it has to offer.

Before you try using your new software, be sure that you’re set up to make the most out of it. For example, if your software has a mobile application, download it!

Once you’ve set everything up, managing your accounts will be easy. Simply put, if you do the hard work now, you’ll reap the rewards later.

Next, decide which of your staff members should have access to the software and get the member or the entire team trained. And, determine what they can and can’t do while using it. Reliable software will keep your accounting data secure, but it’s up to you to limit staff access.

Make sure your software is set up so that you are regularly reminded of tasks, such as saving a backup copy of your accounts or setting reminders for invoice deadlines.

The whole point of having accounting software is to make this easier for you. So, don’t skip out on these steps! Once you’ve knocked out the initial setup, accounting in the future will be a breeze.

Using Your Accounting Software Data

Accounting software makes it easy to keep all of your accounts in one easy-to-find place. So, you can finally say goodbye to the stress of managing individual payments yourself. With the software, it’s automatic!

This is super helpful when it comes to mining for financial data. Any good accounting software should create customized and detailed financial statements for your business. 

You can use your accounting software to view a huge amount of financial data. This might include incoming and late payments, annual outgoings, staff salaries, taxes, and much more. If you’ve been tracking all these accounts using pen and paper methods, get ready to save time! You’ll find it much easier to manage these multiple accounts digitally.

To make the best use of your software, you should be mining (looking at and assessing) this data regularly. Then you will be able to use it to improve your business practices directly.

For example, you can use your accounting software data to track which of y our products are selling best, and which could use improvement. You can also use your software for big budgeting decisions like marketing and advertisements.

Other practical applications include assessing which of your products have a low profit margin. Or, which providers, suppliers, or manufacturers you might be overpaying every month.

If used appropriately, all different levels of your business can benefit from your account software dashboard.

The information is all there, neatly presented; all you need to do is review it and start thinking about how to change those numbers.

A Long-Term Investment: Start Using Your Accounting Software Properly Today

Making the switch to accounting software is a long-term investment for your business. So, while it might seem like a big upfront cost, you’ll soon see that it’s well worth it. After all, the right software can improve your operations for months or even years after your purchase.

And, now that you know a bit about how these programs work, you should feel ready to shop with confidence.

Keep in mind, it’s essential to choose the right software and set it up properly from the start. That way, you’ll be able to maximize on your new accounting system from day one.

Don’t forget, it’s also essential to check on this data frequently. You need to use the information provided by your accounting software to make real-world changes to your business model, for the better. Otherwise, what’s the point?

Accounting software makes everything so much easier. But you still need to invest time to use these tools to their fullest potential.