{"id":8675,"date":"2023-10-03T03:52:29","date_gmt":"2023-10-03T03:52:29","guid":{"rendered":"https:\/\/www.ownr.co\/blog\/?p=8675"},"modified":"2023-12-07T13:21:39","modified_gmt":"2023-12-07T13:21:39","slug":"best-apps-accounting-small-business","status":"publish","type":"post","link":"https:\/\/www.ownr.co\/blog\/best-apps-accounting-small-business\/","title":{"rendered":"How to Choose the Best App For Small Business Accounting"},"content":{"rendered":"

Whether you\u2019re starting up a new business or already have an established one, accounting is the backbone of your daily operations. After all, why else would you be in business but to earn an income?<\/span><\/p>\n

For many entrepreneurs, accounting can be daunting. So much paperwork! You could produce thousands of invoices or receipts per year. You might have to think about payroll and overhead costs. What about business expenses? And then there\u2019s the dreaded tax time. Many small business owners spend upwards of <\/span>1.5 days per week<\/span><\/a> dealing with accounting matters. That alone isn\u2019t cost effective.\u00a0<\/span><\/p>\n

Keeping organized will be your savior, and that includes keeping track of all your accounting matters. By getting your accounting set up correctly<\/a> from the start, no matter how small your business, it will not only save you a lot of headaches as you grow but help you save money. <\/span>And that means business growth.<\/b><\/p>\n

What\u2019s the difference between bookkeeping and accounting?<\/span><\/h2>\n

Bookkeeping and accounting are both important parts of managing your finances. At first glance, the two can seem quite similar, but there are a few main differences. Bookkeeping focuses on recording and organizing financial data. Accounting is the interpretation and presentation of that data to business owners and investors. For your business to run smoothly, ideally you need both people. You’d hire a bookkeeper to look after the day-to-day work. And you’d hire an accountant to handle official reporting and high level business advice. \u200b<\/span><\/p>\n

Bookkeeping<\/span><\/h3>\n

Bookkeeping is an old term that literally means \u201ckeeping the books.\u201d In the days before data entry, it would involve recording all financial transactions in a ledger. Not much has changed since then<\/span>\u2014<\/span>except everything is digital now.\u00a0<\/span><\/p>\n

Bookkeeping is the day-to-day financial operations of a business. It is a fairly monotonous and laborious task, which can become a bit boring for those who need variety in their days. That\u2019s when hiring a freelance bookkeeper might be in your best interest, particularly if bookkeeping is taking up a lot of time you could spend building your business.<\/span><\/p>\n

A lot of business owners use software like Excel for bookkeeping. This is the digital form of a general ledger where all income and expenses are tracked, including money owed to the company and debts of the company. These are called accounts receivable and accounts payable, respectively.<\/span><\/p>\n

Banks offer bank statements, which are a type of bookkeeping. Keeping track of bank statements (all of which are available online now) and credit card statements (yep, all online too!), will help you detect any discrepancies in your bookkeeping.<\/span><\/p>\n

Accounting<\/span><\/h3>\n

Accounting is what comes of bookkeeping. The bookkeeper simply records the information, but the accountant makes sense of that information.\u00a0<\/span><\/p>\n

Accounting involves making financial statements, forecasts, and helps secure funding in the future. It also gives business owners the ability to make informed decisions about business growth and opportunities. Accounting is beneficial come tax time, so business owners can get the most out of their tax returns.\u00a0\u00a0<\/span><\/p>\n

Accounting is also needed to <\/span>create or update a business plan<\/span><\/a>. A business plan is a business document that provides key information about the business, its owners and integral members, target market, operation and business structure, and financial planning. This last section of the business plan will include the accounting portion of your business. If you are looking to secure funding, whether from investors, grants, or credit, you\u2019ll need a business plan.<\/span><\/p>\n

All financial matters related to your business stem from accounting and bookkeeping, and works like a house of cards. If your bookkeeping isn\u2019t up-to-date or accurate, your accounting won\u2019t be either, and that\u2019s not good for anyone.\u00a0<\/span><\/p>\n

Why are bookkeeping and accounting important?<\/span><\/h2>\n

It only makes sense that business owners keep their financial records in order. Here are a few reasons why:<\/span><\/p>\n

Bookkeeping<\/span><\/h3>\n

Bookkeeping is a regular practice that helps you keep track of all your financial transactions. It helps you track performance so you can see if you\u2019re spending too much or not enough, which is part of cash flow management. The other aspect of cash flow management is alerting you to delayed payments, both incoming and outgoing.\u00a0<\/span><\/p>\n

Bookkeeping is the backbone to making tax time simple. Tax time can be a huge headache, but with accurate bookkeeping, it should be fairly easy to file your business tax returns. It will also be your saviour if Canada Revenue Agency (CRA) should ever come knocking on your door with an audit.\u00a0<\/span><\/p>\n

Accounting<\/h3>\n

Accounting is important for your financial big picture<\/span><\/a>. It\u2019s like an advisor who can help you plan and strategize your business\u2019s financial future, whether that\u2019s investing or seeking out funding. It helps you determine if you can hire help, retain freelancers, invest in larger equipment, or branch into research and development of a new product or service.\u00a0<\/span><\/p>\n

Without accounting, you won\u2019t be able to secure a business loan or credit, which can be a lifesaver during dry periods. It also helps you keep ahead of taxes, and can even help strategize a beneficial tax return.\u00a0<\/span><\/p>\n

How to choose the right tool for the job<\/span><\/h2>\n

It might be tempting to use a spreadsheet for your accounting data, but spreadsheet programs weren\u2019t designed to be a substitute for accounting software. You can quickly run into difficulties if that\u2019s the way you\u2019re using it. Here\u2019s why:<\/span><\/p>\n