Decoding The Basics of Accounting And How to Efficiently Manage Your Accounting Activities Through Software

by | 27 Jun 2022 | Finance, Information

Gone are the days when people who excelled at Microsoft Excel were considered accounting wizzes. There are now plenty of innovative and advanced accounting software that have made accounting easy and hassle-free.

However, with advancements in this field, several different types of accounting software are also available. These software differ on the basis of their capabilities, functions and price tags.

Did you just start a business and wonder what the right accounting software is for you? Though the best idea is to outsource this process to a professional accounting firm, if you are willing to take this on on your own, we have shortlisted the best accounting software for you.

Wait… Do you know how people used to manage their accounts prior to the advent of accounting software? Thinking about spreadsheets, ledgers and balance sheets? Close enough, but not accurate. Microsoft Excel was the accountant’s best friend for managing basic accounting tasks.

Before we dive into the best accounting software for automated accounting, let’s check out how Microsoft Excel was streamlining business processes worldwide.

From Excel to automated software: the digital transition of accounting

According to research conducted by Forrester, around 81% of global businesses reported using Excel for accounting-related tasks. Since it is easy to use and can automate the most chaotic data manipulation tasks, it is a preferred accounting tool for small businesses.

Excel does so much more than just compiling data. It can be used for various purposes: accounting, charting, inventory management, flow chart work, forecasting, and so on. However, Excel is losing ground as a popular budgeting and accounting tool despite all these features.

If you are reading this, chances are you are using spreadsheets to store and sort your financial data. How much time do you spend preparing spreadsheets? And, does this work efficiently for managing a multitude of financial reports?

There is no doubt that Excel remains a core tool for most accountants. But, as your business grows, your financial data will increase too. At this point of time, it may become challenging to sort and compile everything using Excel. That’s why most accountants are switching to accounting software.

Let’s have a look at some points against using Excel for accounting:

  • Excel formulas are hard to remember, complex and prone to errors.
  • Because it is hard to track who’s making changes, spreadsheets are susceptible to fraud.
  • Excel is prone to errors such as copy/paste errors and wrong formula entries, to name a few.
  • You’ll need to create a different spreadsheet for each income stream. So, as the business and services grow, the number of sheets will also increase and become more confusing.

While it’s true that Excel is a sophisticated tool (only if you’ve mastered it), it is still prone to errors due to the number of manual entries involved. Additionally, tracking history is the biggest challenge with spreadsheets. Therefore, we encourage businesses to use accounting software such as Zoho, QuickBooks, and several others.

Are you ready for your digital transition? Let’s find out the best accounting software to begin with.

Best accounting software to embark on your accounting journey

Over the last few years, the accounting landscape has changed significantly. Abandoning Excel and other traditional accounting practices, over 64.4% of small business owners have switched to using accounting software. With automation and easy processing, these software help to automate all levels of accounting tasks. Compared to Excel, accounting software is more efficient and eliminates errors from manual processing.

People often misunderstand eCommerce management and accounting software. The fact is that both are different and cannot be used interchangeably. Though they can be easily integrated with payment gateways, they require plenty of customization and manual intervention to ensure accurate reports. Are you interested in knowing more? We’ve listed below the five best accounting software with excellent features & functions for small businesses. These are easy to use, and available at a reasonable price.

Tally

Tally is the most trusted and widely used accounting software, and is powered by accelerated multilingual technology. Due to its ease of use, it has gained popularity as an accounting software in India. Additionally, it offers a range of solutions in respect of accounting principles, inventory monitoring, invoicing, purchase orders, stock valuation methodology, etc.

Features of Tally

  • Accounting without codes
  • Multilingual capabilities
  • Individual bill tracking
  • Compatible with various Microsoft applications
  • Real-time data capture and reporting

QuickBooks

Another accounting software, QuickBooks, is an all-inclusive software developed and offered by Intuit. It is available in cloud and desktop editions. Due to its ease of use, it can be used with little or zero accounting experience.

Features of QuickBooks

  • Integration with leading payment platforms
  • Helps in the tax return with mass data exporting capabilities
  • Sales tax calculation and recorded tax payments
  • Centralised expense tracking
  • Advanced inventory management and streamlined feeds

Zoho

With robust accounting features and an automatic bank feed, Zoho is undoubtedly one of the best accounting software to start with. Moreover, it supports integration with up to 40 apps, so chances are that it can be integrated into your current accounting software.

Features of Zoho Books

  • In-built tax compliances and audit report capabilities
  • Sales order and receipt management
  • Invoice generation and automatic tax calculation
  • End-to-end accounting
  • Reconcile bank statements

SAP Business One

From accounting, budgeting, invoicing and inventory to analytics and reporting, SAP Business One is an all-in-one solution for small businesses tracking their accounts. It can help across financials, human resources, quality management, purchasing management and many other business modules, along with accounting.

Features of SAP

  • Manage cash flow, assets and monitor project cost
  • Automated journal entries, accounting receivables and payables
  • Faster payment reconciliation
  • The centralised data management
  • BI-powered analytics and reporting

FreshBooks

Rated as the best cloud-based accounting software for small businesses, FreshBooks has excellent features and functions. It stands out with its fantastic customer service, and a custom invoicing feature, making it ideal for the fastest-growing businesses.

Features of FreshBooks

  • Built-in estimates and proposals
  • Pre-populated charts of accounts
  • Easy app integration
  • Automatic tax calculation and billing
  • Bank deposits, recurring payments, plus expense tracking

Here’s how you can transform your accounting with automated software

“Accounting is the backbone of businesses”, and every accountant will agree. Well, the language has gone through many transformations throughout the decades, and technology has contributed positively to simplifying the accounting choruses throughout the transition.

Though we don’t refer to it as technology; it starts way back with the invention of the abacus. After several efforts to assist accountants and mathematicians, the calculator was invented, and this suddenly made big equations seem small. Gradually, with Excel and similar inventions, accounting took on a whole new look by the end of the twentieth century.

Today’s accountants are efficiently managing books with automatic and smart accounting software. Are you wondering whether or not you should take on this transformation? Unable to take the call? All right, let’s look at the pros and cons of accounting software.

Pros of using accounting software

Technology has made the accounting process easier and much quicker. To help you make a decision faster, we have listed the pros of accounting software.

Accurate finances

With a structured set of tools, it is easy to manage your finances with accuracy and efficiency.

Automation saves time

Accounting seems really quick, simply because of the automation. Most software can smoothly handle budgeting and forecasting, saving you considerable time and effort.

Cost-effective

While it might be taking away the jobs of many human accountants, accounting software is more cost-efficient. However, software quality is still questioned.

Increased productivity

With automation, accurate entries and saved time, accounting software can help to boost productivity and streamline your process.

Easy payroll management

Employee management becomes easier with accounting software, especially with respect to finances, compensation and other parts of payroll.

Cons of using accounting software

Technology can be both good and bad, based on how it is used. It certainly makes our lives better but can also hinder our day-to-day operations. To help you find a middle ground, we have highlighted a few common cons of using accounting software below.

Deep learning curve

Learning the technology of accounting software may be difficult depending on your familiarity with technology and the software you choose.

Might have hidden charges

This is common with almost any industry, but accounting software is prone to having more hidden fees that you may find costly and unnecessary.

It can be expensive

While it saves time and streamlines the process, accounting software comes at a relatively significant cost, making it less preferable than outsourcing your accounts.

Regular maintenance is required 

Over time, the software will evolve and require updates to meet current market and regulatory needs. Expect this to bring additional downtime and challenges.

Hackers and internet security put your data at risk

Technically, it is just like banking. If you work with accounting software, especially cloud-based, your privacy and data safety could be compromised.

Why is tally India’s favourite accounting software? What are similar alternatives to tally?

Because it is simple, easily available and affordable, Tally is among the few accounting software that rule the accounting industry in India. Tally has made accounting easier and more affordable for everyone. When it comes to ease of use, Tally is a software that is accessible to anyone that has an accounting requirement.

Ease of use is, perhaps, the biggest reason why most accountants still love using Tally. However, due to its GUI interface, it is losing popularity. Furthermore, most companies prefer outsourcing big chunks of their accounting tasks, and the rest opt for fully-automated accounting software like QuickBooks and Zoho.

Are you looking for a better way to maintain your books of accounts? Savage and Palmer is a leading accounting firm in Mumbai. With expertise in all leading accounting software, we can help you stay on top of your business’s finances without any hassle.

Click To Know About Our Accounting Services

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