One thing I’m grateful for that school taught me was the importance of an accounting system. While I may not retain everything I learned from majoring in accounting, that fact stuck by me.
And I’ve implemented this system into my business today.
It doesn’t need to be a state of the art system, but depending on what you are doing in your life, having some kind of system will help. To start, if you’re running a business it might be smart to consider these accounting software programs. If you’re a solopreneur, you can always go with something simple like a spreadsheet.
But what exactly are those benefits of having an accounting system in place?
Well, let me explain.
Makes Taxes Easier
In the spirit of taxes, clearly having everything organized in one place makes life easier. A good comparison is looking at how I do my accounting versus my parents.
While my parents aren’t trying to build a business with multiple income streams, they do store every piece of tax information in a brown box. Every government document and slip they get, they store away for taxes.
And every year around tax time, it’s normally a scramble as my father skims over every document, pulls out all the necessary numbers and puts it into a tax return.
Sure there aren’t that many numbers, however, one thing worth mentioning is that my father has started to run a side-business. And obviously, those have bills and earnings.
So the fact they don’t have a system in place makes my dad’s life harder seeing as he’s the one who does the taxes.
For me, I have a simple Numbers (aka Excel) sheet and record every transaction. At the end of the year, my tax return literally takes a few minutes of my time.
On a business scale and on a personal scale, an accounting system of any kind will cut costs down for you. It’ll save money in the sense that there will be fewer paper copies that you’ll need to hang onto.
Furthermore, if you’re willing to learn the basics of accounting software or make your own makeshift accounting system you don’t need to hire an accountant, saving you more money. This can apply to
For larger businesses, the savings come from storage space and workers. For one, an accounting system automates the accounting process which means you’ll need fewer hands. The other is that you can store your books and records online. This gives you room to remove paper copies that take up space and can be replaced with other more important items.
Sending Digital Invoices
While it might not be as practical for individuals (unless they have a side-business) but one feature that’ll help is invoicing electronically. These days it’s not out of the ordinary for stores to ask if they can send a bill to you via email. In fact, this “feature” is something that many predict will be used more. By 2022, 70% of our interaction with businesses will be through phones.
So having that convenience is helpful.
Not only are you ahead of the curve by having a system in place, but you also get money faster and easier. It’s easier for people to click a button and pay a bill through this system.
And if you don’t get one, don’t feel like you’re being left out. Many third-party cash services have invoices too. Paypal has one where you can send an actual invoice or provide a link to make paying easier.
The biggest thing is the fact it saves time too. Sure it’ll save a headache when tax time comes around but even in other cases, it can help too. By being able to navigate through an accounting system, you’ll begin to learn how to automate things on a deeper level.
It’s to the point that you can remove a lot of redundant tasks that people had to do in the past. Like bank reconciliations, running payroll for employees and more.
These tasks can be manageable on a small scale but when you’re trying to grow, the more these tasks become more pressing and
Having some kind of accounting system when you start can help you recognize the need for it as you grow your business.
And even if you’re not in business, a bare-bones system can make budgeting and other personal finance tasks easier.
Accounting Systems Help
Whether you have a full-fledged accounting system, or something as simple as a spreadsheet, these systems are useful. It’s a way for you to keep all of your data in one place and removes the guesswork.
Not only that but some accounting systems today are stored on cloud software, allowing you access to it anywhere. The sheer convenience of these systems is something that shouldn’t be overlooked.
To your growth!
Eric S Burdon