MaRS Library Using bookkeeping software to manage your financial records
Startups need accurate and timely financial records in order to make key operational decisions. Bookkeeping software can streamline this process. Without proper bookkeeping, you risk costing products incorrectly or not having the inventory to fill a crucial order.
Startups can manage their financial records cheaply and efficiently
Having quality financial records does not mean you need complicated bookkeeping or accounting software. Bookkeeping records for small businesses can be managed cheaply, efficiently and quickly. For startups, spreadsheets offer an easy means to record revenue, expenses and other accounts; they can also be used to complete any reconciliations and prepare financial statements.
As your business grows, the data you record will increase and become more complex, so it is important to consider if the software you are using can provide all of the users of your bookkeeping data with the information that they will need.
Bookkeeping software can be customized
There are many bookkeeping software programs available. Several of them offer customers the ability to customize for their needs, by adding individual modules or producing certain reports. These features allow you to have a simpler or more complex system for payroll or inventory, as needed. There is also industry-specific software that is tailored to your industry’s needs. Most of the software programs also integrate the sub-ledgers (such as the detailed listing of accounts receivable) with the main accounting records, which streamlines the accounting process as the business becomes more complex.
If the bookkeeping is done by an external accountant, the accountant can assist the owner in the selection of an appropriate accounting software package. In many cases, outside bookkeepers provide bookkeeping software.
Choosing bookkeeping software: Key considerations
Before choosing what bookkeeping software (including spreadsheets) would best suit your business, consider the following questions:
- Who will be using your bookkeeping records (e.g., management, an external accountant, an auditor)?
- What volume of transactions will there be?
- Will the business have inventory to account for?
- Are capital assets a significant portion of the business?
- Will there be several types of services or products?
- Will there be accounts receivable from customers that will need to be tracked?
- Do costs by department or project need to be tracked and reported separately?
Wave, Sage 50 Accounting (formerly Simply Accounting), QuickBooks, QuickBooks Online, FreshBooks, and Sage 300 (formerly Sage Accpac) are all examples of accounting software designed for small businesses. They can be used in conformity with Canadian Generally Accepted Accounting Principles (GAAP).
Advantages of using bookkeeping software to record your transactions
Use of bookkeeping software offers the following advantages:
- Speed: Data entry can be completed more quickly than through any manual processing, as one entry posts to the appropriate accounts as well as to sub-ledgers
- Accuracy: There is less room for error as only one entry is made
- Integration: Modules such as payroll allow for integration of the deduction calculations and recording of payroll expenses
- Up-to-date information: Users can see the real-time state of the company’s financial position
- Cost savings: Computerized accounting reduces time spent on bookkeeping