Why Accounting software like QuickBooks Are Essential for Businesses

Small-scale business owners can appreciate accounting tools as it allows them to track their accounts payable and accounts receivable, better understand their financial performance, and prepare for tax time. In the realm of accounting software, small-sized businesses use standard software without the need for significant modifications.

As businesses grow, the company’s accounting requirements become more complicated, and a custom ERP (ERP) program is frequently required.

A variety of accounting software is available to small businesses, with various capacities and prices. In general, the nature of the industry and the number of workers are the two aspects that can help a business owner decide on suitable accounting software. For instance, in the case of freelancers, the freelancer will not require the same features from the accounting software as restaurant owners.

Nineteen accounting software firms were analyzed and compared before choosing our top five choices for small companies. In evaluating businesses that cost money, we also considered the ease of use and features, as well as integrations and scaling.

What Is QuickBooks & What Does It Do?

Tim has been a Certified QuickBooks Time (formerly TSheets) Pro, QuickBooks ProAdvisor, and CPA with over 25 years of experience. Tim’s expertise is applied to Fit Small Businesses’ Accounting information.

QuickBooks is one of the most well-known small-scale accounting software that small-scale firms employ to manage the flow of cash and expenses and monitor their company’s health and financial condition. It is a great tool for invoicing customers, paying bills, producing reports, and preparing taxes. QuickBooks is a great choice for tax preparation. QuickBooks product line offers a variety of options that can be used by anyone, from freelancers to mid-sized businesses.

QuickBooks provides a variety of options. We recommend QuickBooks Online for the majority of new businesses. It is possible to try QuickBooks Online for free with the 30-day trial, which does not require a credit card.

10 Ways Small Businesses Use QuickBooks

Small-scale business owners usually employ QuickBooks to manage their invoicing, pay their bills, and monitor their cash flow. Additionally, they use it to prepare monthly and annual financial reports and quarterly and annual taxes for businesses. Certain entrepreneurs manage their own QuickBooks, while others utilize an outsourced or in-house bookkeeper.

1. Create and Track Invoices

It is possible to make invoices quickly and print them out or send them to your customers. QuickBooks will keep track of the revenue and keep track of the amount each customer owes you. You can check the total amount of outstanding invoices–also known in the accounting industry as accounts receivable (A/R)–as the number of days, they’re past due by running an A/R report on aging. Here’s a sample of an A/R aging report that you can download from QuickBooks Online:

2. Keep Track of Bills & Expenses

QuickBooks tracks your expenditures and bills regularly with the help of linking your banking as well as credit card account with QuickBooks to ensure that all expenditures are downloaded and categorized. If you want to keep track of the cash or check transaction by hand, you can track it in QuickBooks within a couple of minutes.

You may also input bills into QuickBooks as you receive them so that QuickBooks helps you monitor the upcoming payments or A/P. It is possible to ensure that you make your payments in time by generating the A/P record. The report will give you details about the bills that are due and those that are not. Here is an example of an A/P aging report by QuickBooks:

3. Print Financial Statements for Your Business

If you manage all your cash inflow and outflows within QuickBooks, You can generate financial statements that offer valuable information on how your company is doing. Lenders often require financial statements when you seek an unsecured small business loan or line of credit.

4. Track Employee Time & Expenses

Employees and subcontractors can record their time throughout the day, or the bookkeeper can record their weekly hours if an employee is required to submit a paper timesheet. The time entered and allocated to customers will be able to be added to the next invoice for the customer.

Each expense you enter can be classified for billing and assigned to the customer. Similar to time, invoiceable expenses will be included in the next invoice due to the customer. There is no need for the payroll add-on to monitor the time of employees to be able to bill them.

5. Payroll

Payroll is a subject you should not cut corners on when you attempt to calculate it manually. Incorrect calculations of pay could result in severe penalties and unsatisfied employees. QuickBooks includes a payroll function, which can calculate and run payroll as often as you require.

When you record employee hours, as we discussed earlier, the hours do not just go to your invoices but are also sent to payroll. In this way, you are assured that the time you invoice your employees will also be considered for billing to the customer.

The greatest benefit of employing QuickBooks Payroll is that it’s integrated into QuickBooks to ensure that your financial statements will always be current with the most recent payroll completed.

The purchase of a payroll QuickBooks service is necessary for payroll processing. However, you can select from a variety of different levels of service you can choose from depending on your needs.

5. Track Inventory

QuickBooks will track the amount and value that your items cost. If you sell the inventory, QuickBooks instantly assigns a portion of your inventory costs of sales (COGS), which is an expense account that reduces your earnings. This allocation is required to calculate taxable income, and it is a hassle to perform manually. QuickBooks also can remind you to purchase stock automatically when inventory levels are insufficient.

Below is an example Inventory Valuation Summary document that comes from QuickBooks Online. The report provides a complete list of inventory items, their quantity, the average cost, and their total value.

6. Simplify Taxes

One of the things QuickBooks can offer your small business is to reduce the tax burden. Most likely, the greatest difficulty in preparing your tax return is preparing your earnings and expenses.

If you utilize QuickBooks throughout each year, then all you have to do when tax time comes around is to print the financial reports. Even better, with QuickBooks Online, you can invite your tax professional to log into your account to look over your figures and print the details they require to complete your tax return.

7. Accept Online Payments

One of the most effective methods to increase the cash flow of your business is to give customers the option of paying the invoice online. You can include QuickBooks Payments (formerly called Intuit Merchant Services) so that clients can pay online directly from the invoice they receive via email.

QuickBooks Payments is similar to other merchant services. However, since it’s fully integrated within QuickBooks, the transaction, credit card fees, and a cash deposit are all recorded when they occur.

8. Scan Receipts

Another way to make tax filing easy is the ability to keep your receipts organized in QuickBooks. All QuickBooks Online subscribers can download the QuickBooks application on their mobile devices to take a photo of their receipt and upload it to QuickBooks Online in just a few minutes. No more lost receipts or connecting receipts to transferred bank transactions. QuickBooks lets you add a receipt to the bank transaction that it corresponds to. It is possible to upload any amount of receipts into QuickBooks Online as the receipts are saved in the cloud, along with your data.

9. Track Mileage

Many self-employed employees/owners and employees use their private vehicles for business use. This can provide a substantial allowance for tax purposes of 58.5 cents for each mile until 2022. To qualify for the deduction, you must keep a log that includes the dates, the miles, and the reason for your journey.

10. Balance Sheet Report

A Balance Sheet report shows what your company’s assets are (assets) as well as the amount the company owes (liabilities) as well as its net worth (equity) as of a certain moment in time.

Conclusion

Are you searching for accounting software? Find out more about the ways QuickBooks Online could aid you.

Making your accounting simpler is an important step toward a better way to improve the management of your business finances, make better decisions, and eliminate the stress from tax season. Start today by registering for a trial for free to find out how accounting software can change your business processes and help you concentrate on moving your business ahead.