29 % of small and medium scale businesses fail because cash runs out. Surprisingly, 45% of small businesses don't employ a bookkeeper or accountant.
Are they to blame? Money is the issue, right?
No, no one should run a business blindly. The accounting and bookkeeping function is critical to manage the company's cash flow and improve transparency in financials.
It costs a pretty sum to own and manage an accounting department, yes, but small business owners can benefit a great deal from accounting software. Today there are a significant number of accounting apps to automate the process of tracing accounts payable and accounts receivables.
So? Implementing these solutions would be enough?
It's a start. The road to profitability starts when you get in tune with the amount of revenue generated by the sales of your products or services. If you are in the dark, that often leads to funding shortages that can put your business out of operation.
The right software will make it easier for you to handle every day simple accounting tasks. But still, there are instances when you will need an accountant.
Accounting software gives you numbers, but accountants give you actionable insights.
Oh. That makes sense.
The programs empower you to manage your working capital effectively, but now and then, you'll need an accountant. If you think about it, cloud accounting models can save a business a load of money; granting them access to powerful bookkeeping software plus virtual bookkeepers. This eliminates the need to hire an in-house accountant or bookkeeper.
What are the "best bookkeeping and accounting apps?"
There are many such apps, and you must have heard about them too because they are highly popular, from Freshbooks to QuickBooks Online to Xero, Wave and others. When it comes to accounting software, small businesses can use an out-of-the-box app without requiring excessive customizations. That's a good thing with regard to usability and cost savings.
However, as the business grows, the accounting becomes more complex, and the solution would have to be rightly customized. That's where an online CPA comes in.
Which means they can help choose the best software?
An online bookkeeper can be of great assistance when choosing accounting software. Even so, the set up process is complicated and relies on your understanding of business needs and the challenges that you face tracking and managing your credit and cash.
You might want to consider your niche and accounting skills.
Cloud accounting tools can be specialized or standard, depending on your niche. For example, there are specific accounting apps customized for businesses in the construction, manufacturing, and retail sectors. And there are unique accounting apps for restaurants and travel agencies as well.
Doing research is essential because the app you choose will directly affect how your revenue and working capital is managed. An online accountant will take care of this.
Do I need accounting skills to use accounting software?
When choosing accounting software, it also good to consider that even though the accounting app will make bookkeeping easier, it will still require a certain level of financial literacy. You need an online accounting service that will train you and your time.
Sophisticated software is only as useful as the skills of the person using it. You can hire a virtual accountant and bookkeeper to get your team set up & trained.
I've heard about cloud accounting.
Most accounting software, including QuickBooks and Xero, long moved to the cloud. Cloud accounting software could have both an on-prem and cloud-based element. On the prem, you are in charge of the software and the accounting function. On the cloud, you get the program plus managed accounting services.
So cloud-based bookkeeping software is the best choice?
Cloud apps have a variety of benefits. For starters, you can access them from any region of the world, provided you have a strong Internet connection. Your cloud accountant or team, doesn’t need to be on prem. In the age of remote working (especially lately, thanks to COVID-19), with a distributed workforce, that flexibility is something that you need.
Further, the program's management, from installation to customization and upgrades are handled on the server end. You might never need to hire or expand your IT department.
All of this, with the added benefit of better security and control of who has access to your data.
How much does bookkeeping and accounting software cost?
That's an excellent question. Budget is an important consideration when choosing accounting software. If your business makes $100,000 per year, you certainly won't need the same setup as a business that makes $1M per year.
When buying accounting software, costs range from $0 to $150 per month. Small businesses start with basic plans, which are in the range of $0 to $40 per month. This software cost is generally included for free when you hire a cloud accounting firm.
Generally, the more feature-packed the software is, the more costly it gets. The niche for specialized software is relatively small, and so if you want an app customized for your niche or company, you should get ready to pay a premium.
Meaning I should explore features first?
Yes. When choosing an accounting and bookkeeping software, look at the number of features you are getting. Look at the types of features versus the type and size of your business. Consider integration as well. Or just rely on the expertise of your cloud accounting partner. (links to zivo.ca) to find the best option for your business.
How easy would it be to connect the accounting app to your payroll or eCommerce checkout software? This is important because, without a seamless integration, you'll miss out on critical financial data. That would lead to inaccuracies so you need a team with the technical experience to make all the right connections and automation.
The Best Bookkeeping and Accounting Software
Below is a rundown of the bookkeeping and accounting software that could work well for you, specifically for small businesses in North America. You have a vast number of options, so you should consulting with your cloud accounting team (links to zivo.ca) to determine what’s right for you.
1. QuickBooks Online
QuickBooks is a darling for most small and medium scale businesses because costs are as low as $7 per month. The biggest advantage here is that there are many online training resources courses for QuickBooks. There are many forums where you can get support when you need it.
Accounting features include tracking income and expenses, sending custom invoices and quotes, tracking VAT, and generating extensive reports. The Plus plan lets you track inventory and manage projects and budgets on top of the basic functionalities,
QBO is highly scalable and can be integrated with many third-party applications. It is cloud-based and can be used on mobile devices.
The caveat is that you must upgrade to a higher plan to accommodate many users. Some users have also experienced problems syncing it with banks and credit cards.
The Xero online accounting software is cloud-based as well. It is, however, much simpler and designed for small businesses. You might like its clean interface and full integration capabilities with a payroll service and payment platforms like GoCardless and Stripe.
Xero is free for the first 30 days. After that, the starter plan starts from $7.50/ month. Functionalities include sending invoices and quotes, tracking bills and reconciling receipts, reconciling bank transactions, and managing projects.
The starter plan is limited to five bills, five invoices or quotes, and a reconciliation of 20 bank transactions per month. This plan may be ideal for a small business with a few transactions per month. Both the Standard and Premium plans offer unlimited functionalities.
FreshBooks is ideal for service-based businesses as it effectively handles the invoicing function. You get more customizations for invoicing here than you would with any other accounting and bookkeeping software.
FreshBooks main features support sending, receiving, printing, and paying invoices. As a service-based firm, you will find it easier to collect retainers, send invoices and deposit requests, and track projects and accounts receivable.
The cloud-based solution has an on-prem version and is readily integrable with other business management software. Apart from a user-friendly interface, pricing is pocket friendly too. Like Xero, you get 30 days of the free trial, after which pricing starts at $15/month.
FreshBooks is perhaps the most advanced invoicing solution. However, it doesn't have a payroll service or inventory management features. Its mobile app is limited.
The Journal of Accountancy reports that small businesses with less than 100 employees lose $200,000 to occupational fraud every year. This, together with low liquidity, are problems that start when there is limited visibility into revenue and liabilities.
How can Plooto help?
This accounting software automates accounts payable and accounts receivable on granular levels so that you don't miss a single transaction. It is easier to reconcile payments and approvals, and you can generate reports that paint an accurate financial history, leaving little room for fraud.
Great for those of your hiring freelancers and contractors.
Also, Plooto has features for accelerating vendor payment, and it's also integrable with QuickBooks and Xero. The platform offers you a 30-day trial, after which pricing is a standard $25 per month.
Plooto supports unlimited users per business with all its features available in one plan. However, it doesn't offer inventory management.
45% of small businesses don't employ a bookkeeper or accountant because of high costs. Wave is a free solution. It could be ideal for startups and small businesses that are bogged down by costs. It helps to send simple invoices and without having to track inventory or manage payroll. Wave's free features can be a blessing if you are a service business or freelancer with limited accounting needs.
At the end of the financial year, the platform generates the right reports that you would need to prepare tax returns and set goals. Wave means free billing and free counting, free receipt scanning, and unlimited users.
Full-service payroll is not available in some states. Plus, there is no inventory management and it’s missing some other common features.
6. Receipt Bank
If you still do data entry and bookkeeping the old way, going paperless can save you an insane amount of money. One study reveals that paperwork costs businesses $8 billion a year. ReceiptBank is a solution that could help you reduce the costs.
Features include automation in collecting and processing receipts and publishing invoices. This solution could help you do more by getting the paperwork out of your way.
It is built for instant data capture and extraction. You can send invoices via the app on your phone along with reminders to clients to help them stay on top of account payables.
ReceiptBank is readily integrable with QuickBooks and other accounting software.
Limited functionality in payroll and inventory management. Needs to be synced with accounting software.
Hubdoc is a cloud bookkeeping application that automatically obtains financial documents from your banks, providers, utilities, online vendors. It extracts the critical financial data and feeds it into your cloud accounting platform together with original documents attached. Pricing starts from $12/month.
If you are having problems with payment processing, reconciliation, or audit-proofing, Hubdoc could help to streamline things. It eliminates the need for data entry and filing. You can take a picture of the receipt or invoice with your phone and feed it into this software for data extraction.
The bookkeeping solution can generate reports and keep track of thousands of receipts and invoices. However, it must be paired with accounting software for complete AR and AP processes.
Expensify has full features for sending invoices, paying bills, and managing receipts. Those in the travel industry can use it, retail, manufacturing, and others.
Pricing starts from $5/month, and you get unlimited receipt scanning. You can photograph your receipts and invoices and feed them into the solution for data extraction. An advanced feature, the Expensify Card eliminates the need for receipts in entirety.
The solution tags and submits your expenses for faster approval and payment. It needs integration with accounting software, but you will get features for bill payment and invoicing. A travel booking component is included to help you manage your business travel needs with ease.
The Expensify software is fully scalable and has a mobility aspect. However, its auto-fill function occasionally misses logos; you'll have to enter company names manually.
These are the easiest, low cost and feature-packed accounting software options to use. You will find that the solutions reduce the amount of time you spend on data entry by allowing you to sync your business bank accounts and credit card details with the software.
So now what?
You get to focus on what matters. Achieve more as a business owner. Let your cloud accounting team take care of everything, by leveraging accounting and bookkeeping software that eliminates the paperwork and automates much of the accounting process. It saves time all while helping you maintain healthy financials.
How do I get started?
We are here for you; helping you achieve more is our sole objective. These accounting solutions need you to have an understanding of accounting principles and we know not every business owner is there. The apps need to be properly configured, and you will also need regular actionable insights from the reports. That's where we step in. We’re your complete online accounting team.
Zivo’s online accounting solutions makes it easy to automate accounting while having access to professional assistance. Contact us to get started and find out which software options would work best for your business.