Think of business financial statements as the prologue of books you are about to read. They give you a preview of your business's financial status. If you, investors, and creditors would like to grasp how you manage your company's money, looking at financial statements is the way to go. With this, it is your job to generate these financial statements regularly and as needed. And when done manually, that is no easy task.
But bookkeeping and accounting software undoubtedly bring a lot of convenience in preparing and generating financial statements. With these, let’s look at the four tips to using accounting software for preparing your business financial statements. Let’s begin!
Tip #1: Know the Benefits of Using Online Accounting Software
Although signing up for bookkeeping and accounting software will add to company costs, the investment is worth it. Aside from generating financial statements, these are some benefits you’ll reap in using bookkeeping and accounting programs.
Automated Data Collection and Monitoring
Software can make data collection and monitoring stress-free. This is because you can integrate all the information from the different platforms and tools you use. Whether the data you need is from different ecommerce platforms like Amazon or Shopify, from a tax software, an optical character recognition (OCR) tool, a human resource management tool, customer relationship management program, or various payment gateways, you can all add them in the accounting system automatically through integrations.
Accurate Computations
When generating different financial statements, lots of computations will occur. After collecting and monitoring data that will be included in the statements, software can also do the calculations for you. Whether it’s the computation of your company’s profit, owner’s/shareholder’s equity, taxes, assets, or liabilities, you’ll know the details immediately through help from the software. Skip the hassle of inputting formulas on Excel sheets, which is prone to human error, and rely on accurate outputs from software instead.
Easy Generation of Reports
When data collection, monitoring, and computation are handled, generating reports will be easier. It is more convenient when using a bookkeeping and accounting program because these tools already have templates for the different financial statements you need. Just pick a report you need to generate and the software will do all the work for you.
Tip #2: Pick the Best Accounting Software
You now know some of the benefits you can reap by using accounting software for your financial statements. Our tip number two is all about picking the best tool there is. When searching for the best accounting tools, you will discover names like QuickBooks accounting, Xero, Sage50 cloud, and FreshBooks. Learn how these accounting software options can assist you in preparing your financial statements.
QuickBooks
A financial statement will only be generated when all the details needed to fill it out are complete. QuickBooks cloud-based accounting software has features that enable you to track all your business finances.
Different data from various third-party apps can be integrated with it for your financial data to be complete. With this, when you need to generate any financial statement, the tool will gather all the information already stored in the software. Check QuickBooks’s pricing to know which version offers financial statement generation, so you can sign up for the most efficient one.
Xero Software
Not far left behind the financial tracking capabilities of QuickBooks is Xero. The tool tracks sales, cost of goods sold, inventory, taxes, projects, employees’ rendered time, bank accounts, and plenty more details that make up your business income and expenses. These are all readily available in the Xero cloud-based accounting software, and they can be utilized when creating financial statements.
Xero has ready-made templates for income statements, balance sheets, and cash flow statements. If there are details you need to customize, Xero reports are open for customization too.
Sage50 cloud
Sage50 cloud has a specific list of financial statements they can help you generate. They have the primary reports you need to get, like cash flow statements, income statements, and balance sheets. The income statement can be further optimized into showing you reports for a particular period, year-to-date, or two years. Sage50 cloud also generates reports like a general ledger account summary report, statement of changes, statement of income and retained earnings, and statement of retained earnings.
FreshBooks
FreshBooks is one of the easiest accounting software to use. It is a straightforward accounting software designed to cater to freelancers, self-employed individuals, and small- to medium-sized businesses.
FreshBooks can generate profit and loss statements, sales tax summaries, accounts aging, general ledger reports, expense reports, invoice details reports, and time and project tracking profitability reports. Because all data you need are stored in the tool, you can get these reports in a few clicks.
Tip #3: Familiarize Yourself With the Different Financial Statements
Does the capacity to generate different financial statements sound promising? The numbers and reports will only make sense when you know what they are for. Here are the three basic financial statements you should check and the different insights you’ll get from them.
Income Statements
You’ll see many details in your company income statement, like the revenue, cost of goods sold/cost of sales, gross profit, operating expenses, operating income, non-operating items, earnings before taxes, and net income. All these details boil down to providing information about your business expenses, revenue, and net income. This is a report that states whether or not your business is profitable.
Cash Flow Statements
As the name of this report suggests, a cash flow statement gives you an idea of how the money flows in your business. You’ll have visibility on the money that’s coming in and where it is from, and you’ll also see how company money is being spent and where. A cash flow statement details various operating, investing, and financing activities to give you a more in-depth look at your cash flow.
Balance Sheets
Check your balance sheet if you want to know your business assets, liabilities, and owner’s/shareholder’s equity. The premise is that your business should have more assets than liabilities to ensure you can meet all your financial obligations and make your business thrive. On the other hand, the owner’s/shareholder’s equity shows the amount you can give to yourself or the shareholders. The higher your company equity is, the more investors you can entice to invest in your business.
Tip #4: Utilize Both Accounting Software and Assistance From Experts
By following the previous tips, you will know what bookkeeping and accounting software can do for you and how to read financial reports. You should now have the confidence that you’ll get accurate reports and trust that you will understand any financial deck.
Make your daily operations and business management even easier by complementing your tools with help from experts. These days, many bookkeeping and accounting firms offer complete services to assist you in managing your business finances. Here are some of the benefits you’ll enjoy in partnering with them.
Stay Prepared With Statement Notes
Experts from a firm can help you make sense of the numbers and the statements through statement notes. The statement notes include methods and rules used to develop the report and how the numbers were computed. These notes also explain how the accountant comes up with their various insights to help you in your financial decision-making.
Get Reports Regularly
When partnered with a firm, you can get financial statements and reports regularly or as often as you need. As a result, you can check up on your business’s financial health as often as possible. You can use these reports to know if you are hitting your goals or need to adjust your game plans to succeed.
Accurate Financial Statements
When it comes to your business finances, accuracy is a priority. It is only when the numbers are correct can you make correct decisions. It is a must for business owners like you to make it a part of your daily routine to check the accuracy of your books and the reports that you get. You can get a helping hand in fulfilling this task when you have an account manager from an agency working with you.
Partner With Unloop!
In conclusion, bookkeeping and accounting software are essential for generating financial statements. These tools offer convenience and help streamline collecting, monitoring, and computing financial data.
Utilizing software and expert assistance can provide a comprehensive solution to managing your business finances effectively. Picking the best software for your needs and familiarizing yourself with the basic financial reports and insights they offer is crucial. However, partnering with experts from bookkeeping and accounting firms can offer additional benefits, such as accurate financial statements, regular reports, and statement notes to help you make informed decisions about your business’s finances.Partner with us here at Unloop so that we can assist you with your financial statement needs. We offer more assistance on top of that. If you’re interested, contact us now so that we can discuss our offers and services with you!