Why Should a Sole Proprietor Bother with Accounting Software?
You’re just a small business. Is it really necessary to go beyond an Excel spreadsheet to keep track of finances?
Well, it may not be absolutely necessary, but it sure would save you a lot of time and hassles. Here are 4 ways spreadsheets let you down — and accounting software does it better.
No Automatic Updating
Spreadsheets just give you a freeze-frame picture of one moment in time. With every new transaction, you have to manually enter that information. It’s hard to find time to do that; but if you don’t, you fall hopelessly behind.
Accounting software updates automatically, giving you a real-time look at your cash flow with zero effort. Data is backed up automatically, too. Plus, the software generates reports and graphs that help you see the trends, warnings, and opportunities your numbers are telling you.
No Growth Ability
As your business scales up, you may need features such as payroll processing, online invoicing, or direct payments to suppliers. Spreadsheets can’t do any of that.
Sole proprietors can choose accounting software that will stay with them for the long haul, handling new tasks as they arise. Today’s cloud-based programs also let you share data remotely with your outsourced financial consultants, such as an accountant or tax preparer, saving you the hassles of physical paperwork.
No Safeguards against Mistakes
A spreadsheet is only as accurate as of the numbers you put into it. Manually typing or copying and pasting allows a human error to creep in. How and when will you catch those mistakes?
Accounting software syncs with your sales system and bank, directly importing the numbers from the transactions into your books. Not only is it foolproof, but it also saves you a huge amount of time.
No Audit Tracking
Anyone who has access to your spreadsheet can enter information, and you have to record who did it or when. That may be OK if you as the sole proprietor are the only “keeper of the keys”; but it does leave you vulnerable to fraud.
Accounting software tracks every entry and who made it. This is called an audit trail. Hopefully, you’ll never need it; but isn’t it good to know it’s there?
What to Look for in Sole Proprietor Software
Right now you don’t need numerous capabilities and complexities. These are the functionalities that will change your life as a sole proprietor:
Easy to use — No complicated training or expertise necessary. Many software companies offer a free trial of their products.
Remote accessibility — Cloud-based accounting software that lets you (and selected other users) log in from any device, in any location, at any time.
Security — Cloud-based servers with multiple levels of protection and password requirements.
Scalability — Features you don’t need now but may in the future, such as payroll for employees. Can the software be upgraded as you grow?
Industry-specific functions — For example, if you’re an e-commerce company, look for software that integrates with the major selling platforms.
Subscription payments — Small businesses usually find it easier on the budget to make monthly payments rather than come up with a large sum to buy the product.
Another great option for sole proprietors is to partner with an accounting company that offers integration with its own accounting software. This gives you professional-level functionality far beyond what you could afford if you were buying it yourself.
Xendoo offers a variety of cloud-based accounting and bookkeeping packages at flat monthly fees that are less than half what a typical by-the-hour accountant charges. Say goodbye to spreadsheets and enjoy the difference accounting software makes in your life as a sole proprietor!