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10 Reasons Accounting Software Is Essential for Your Business

Nadav Shemer
accounting software
If you’re a small business owner, then you may be wondering why you need accounting software. The truth is sole proprietors and small businesses with modest income can get by just fine with Excel or free accounting software. But if you have ambitious growth plans or lots of income and expenses to worry about, then investing in proper accounting software is essential.

Here are the top 10 benefits of getting accounting software for your small business

1. It’s a time-saver

Using a spreadsheet program like Excel or Google Sheets requires you to type in everything manually—a laborious and time-intensive exercise. On the other hand, proper accounting software automatically captures data from invoices, receipts, expenses, and statements—allowing you and your staff to spend more time growing your business.

Accounting software streamlines the invoice approval process, enabling you to track the status of invoices and ensuring that data always gets matched to the right PO. This promotes faster payment of invoices, reducing the time your staff spends on menial tasks and keeping your vendors happy.

2. You can save money on operational costs

Employing a bookkeeper (or outsourcing bookkeeping functions) has traditionally been a necessary part of running a small business. But with accounting software now capable of doing most bookkeeping tasks, this is no longer the case.

Automating bookkeeping tasks doesn’t necessarily mean having to replace your bookkeeper. If you have a bookkeeper you trust, you could have them monitor your accounts on a part-time basis while doing value-adding tasks—like using the accounting software to analyze and extract business insights from your financial data—the rest of the time. 

Whether you upskill or replace your bookkeeper, the net result will be less spent on bookkeeping and more on growing your business.

3. It reduces the potential for error

One of the biggest benefits of introducing automation into any workplace is that it reduces the chance of human error. In heavy industries like construction, mining, and oil & gas, automation removes human operators from the danger zone and places them far away in control rooms—literally saving lives. Software that automates accounting processes won’t save lives but, in reducing errors, it could save you a ton of money.

The larger your business, the more financial data you probably have. Entering everything in manually exposes you to costly errors, not to mention the difficulty in reconciling data from disparate spreadsheets. Accounting software pulls in and reconciles data from multiple sources, promoting accuracy.

4. It enables collaboration

Information silos, which exist when employees or departments don’t communicate with each other, can damage your business’s productivity. Accounting software is an antidote to siloing because it makes information open and accessible to whoever has access, encouraging collaboration and sharing between users.

Cloud-based accounting software lets you choose how many users you want to grant access.

For example, FreshBooks charges a flat monthly price for using its software plus an extra $10 per user per month for each user. You can even decide what level of access each user has, helping to strike a balance between collaboration and privacy.

5. It tracks your expenses

Every small business owner has suffered frustration at some point or another with tracking expenses. Keeping track of business expenses is essential to saving money come tax time, but saving every last receipt isn’t always practical.

The best accounting software providers let you download your transactions instantly from your bank or credit card, fill in expenses using a simple online form, or even scan and upload receipts to a mobile app. No more having to frantically search around for gas receipts at the end of the month.

6. It makes tax time easier

One of the great things about having accounting software that puts all your financial information in the one place is that it makes tax reporting a whole lot easier. All the data is already there; all that’s left is to convert it to the format required by the tax authorities.

At a minimum, good accounting software should provide balance sheets, profit and loss reports, and any other customized reports you or your accountant require in order to file taxes. Top accounting software providers, such as KPMG Spark, offer a supporting team of accountants and CPAs as part of premium subscription plans.

7. It delivers real-time business insights

The concept of data-driven decision making, defined as the process of using data to guide business decisions, is gaining more adherents by the day. Fortunately, you don’t have to be a massive enterprise to be a data-driven business. If you have accounting software, then you’re actually sitting on a treasure trove of data that could help you grow your business.

As an example of what accounting software can do for you, QuickBooks gives you instant access to real-time financials including income, expenses, outstanding invoices, and more. Better yet, the dashboard instantly shows profit & loss statements and other KPIs that you can dig into for valuable insights.

8. It secures your financial data

Like the world’s top banks, the best accounting software providers rely on advanced, industry-recognized security features to keep your financial data private and secure. 

When you use top cloud-based accounting programs like QuickBooks, KPMG Spark, or FreshBooks, you know that your data is secured by high-level encryption, multi-factor authentication, and firewall protected servers.

9. You can manage your finances from anywhere

Accounting software comes in 2 forms: desktop and online (also known as cloud-based). Desktop accounting software is an application you install on to your company’s computers. Online accounting software, also known as software-as-a-service or SaaS, has the same functions but runs on the cloud.

Cloud-based software lets you manage your finances from anywhere, and it enables team members in different locations to easily share and collaborate. In this era of working from home, having this capability is more important than ever.

10. It’s scalable

A highlight of cloud-based accounting software is that it is highly scalable. As you grow, the software grows with you. If you’re just starting to grow your business, then you may only want to use accounting software to fulfill basic tasks. But what about later? The great news is that you can add on features as you go, including third-party integrations like payroll processing and CRM (customer relationship management) tools.

Because everything gets stored in the cloud, there’s unlimited capacity to just add (or remove) modules as needed. There’s also no need for extra setup. When you want to add a tool or function, it just appears from out of the cloud, integrating nicely with your existing setup.

Accounting software = outsourcing with added benefits

When you’re trying to grow a small business, outsourcing tasks that don’t relate to core business activities is a great way of cutting costs and improving efficiency. Accounting software is the perfect type of outsourcing because not only does it save time and money, but it also gives you ways to extract added value for your business. Like everything in business, there is an expense involved, but you should see a return on your investment fairly quickly.

Nadav Shemer
Nadav Shemer specializes in business, tech, and energy, with a background in financial journalism, hi-tech and startups. He writes for top10.com where he discusses the latest innovations in financial services and products.