The key role of cloud accounting software & accountants in your business
In this second instalment of a two-part series on managing business finances, we discuss how cloud accounting software and professional accountants help you run your business, and grow it too. Part One can be found here.
Ava’s bakery is a neighbourhood-favourite. She enjoys the daily rush of customers and developing new recipes for them. But as her business grows, she struggles to keep her finances in order. She knows she needs help to balance her books, and stay on top of payments.
Ava’s dilemma is that of many business owners, contractors, freelancers, and entrepreneurs. They want to keep their revenue and expenses up-to-date, but can’t decide what’s right for them – doing it yourself (DIY) with online accounting software or hiring a professional? The truth is, you can’t choose one over the other. The two are synergistic, and are likely both required at different points in time to run your business smoothly.
How to DIY and Delegate Your Business Accounting
Businesses are drawn towards online software because it lets them DIY their bookkeeping and accounting. In a few simple steps you can set up your account and customize your requirements.
When your business expands and finances become more complex, entrepreneurs may feel the need to hire a part-time bookkeeper to keep up the accuracy of transactions on the software. Annually or quarterly, businesses work with an accountant to produce financial reports that predict cash flow and analyze performance. Accountants ensure you comply with tax regulations when it’s time to file taxes for your business.
Your online software remains the source of all of your data that the accountant uses for these milestones, and for providing strategic direction for your business.
What Can You Expect from Cloud Accounting Software?
Since it is hosted in the cloud (online), you can run your business accounts on the go, anywhere, anytime. If used to its full potential, here’s what cloud accounting can do for your business:
- Automate grunt work: Once authorized, the tools can download your bank account activity and automatically reconcile and categorize your transactions, saving you time and effort to manually enter and match every transaction.
- Provide a real-time financial position: Connect your bank accounts and credit cards to see what you owe, and what you’ve earned in real-time.
- Enable paperless expense management: Most tools have features to automate recurring tasks like employee payroll, submitting purchase orders to suppliers and vendors, and paying bills. They offer the convenience to photograph and save receipts through their app and integrate it all with expense-tracking.
- Improve collaboration: Most tools on the market have 24×7 customer support to answer your questions. An accountant you hire, can view your dashboard on the software instead of relying on emails and exchanging files.
- Monitor business performance: rack inventory and supplies and the time and money spent on a project or task. This ability to monitor business metrics helps you plan ahead, predict growth, forecast risks, and estimate earnings.
What Does a Professional Accountant Do for a Business?
While accounting software does the record-keeping and number-crunching, accountants are the financial advisors of a business. They use the cloud software to view your business by numbers, and translate them into actions and recommendations.
- Accountants will monitor the financial health of a business and inform the business about any financial risks, costs they may not be aware of, uncharacteristic changes, and what the business can do to save money, and drive growth.
- They are experts in tax-planning and will often ensure you take advantage of every tax deduction that’s applicable to you.
- Accountant-business relationships are long term engagements. Businesses rely on them to handle complex accounting matters, like government audits, securing loans, acquiring assets, and complying with statutory filings.
The Cost of Cloud Accounting
Your budget and the size of your business dictate how you mix these two financial resources. Cloud-based software like Wave, Quickbooks Online, Freshbooks, Xero, among others, provide bookkeeping and accounting solutions for businesses for a monthly fee, ranging between $9 to $70. Most of them offer a few features for free and charge you for advanced tools.
For instance, Wave, an RBC business banking partner and Ownr Business Perk, has award-winning financial software to track your business expenses, send and create invoices, automate recurring bills, and balance your books for free – everything a small business could use. But when you start clocking in consistent growth in revenue and staff, you can upgrade your plan to include Wave Payments, a pay-per-use feature to get paid online. There’s also the monthly subscription-based payroll feature to pay employees and contractors through a direct deposit, and to generate tax forms.
On the other hand, accountants are qualified professionals with financial expertise who charge a considerable fee for their services. Since their per hour rate runs into hundreds of dollars, it’s a financial overhead that not every business is equipped to take on right away. But their strategic advice and tax support is undeniably crucial when the situation demands. Most accounting software offers a directory of professionals to shop for accountants who practise on the same cloud software as yours, and have knowledge of your specific industry.
We hope this two-part series on managing business finances was helpful. Entrepreneurs start their business with Ownr, and also learn how to build and grow their company through the Ownr Blog. Email us your comments and suggestions about topics we should cover next to [email protected].