Disclaimer: Please note this article is not financial advice. The purpose of our blog is purely educational, so please consult a professional accountant or financial advisor before making any financial decision.
Accounting is the backbone of any business. Thus, learning the basics is a must to determine the future of your company.
However, not all business owners have the right knowledge about the ins and outs of accounting or the right team of professionals for the task. That’s why this article will discuss what accounting is and why small businesses need it for their endeavors.
What You Should Know About Small Business Accounting
Small business accounting involves the basic accounting processes such as cash, deposits, assets, liabilities, accounts receivables, accounts payables, and equity, all of which are essential to your business foundation. Furthermore, business accounting is crucial when starting your own business or commencing a new business strategy.
The professionals working in this field include bookkeepers. Some avail of their services a little while after they’ve launched their businesses. However, doing that could put you at a high risk since no one records your financial data. Your financial data is the basis of your business metrics, which is key to further pinpointing its strengths and weaknesses.
Two Types of Accounting Method
Companies implement two main accounting types in their business strategies: cash-basis accounting and accrual accounting.
Cash basis is an accounting type that focuses on recording the revenue of your income statement only when cash has been paid out. So, if you make purchases or receive a cash payment, these are recorded in your books. Businesses prefer cash-basis accounting when tracking their cash flow.
Meanwhile, accrual accounting records each transaction regardless of whether or not cash has come in or gone out. In other words, accrual accounting tracks revenue while delivering a product or service and expecting the payment in a future time. In contrast to the cash-basis accounting method, accrual accounting records transactions even without money exchange.
Depending on the nature of your business, an accountant will determine which one is a better fit for your business cycle. Thus, the effectiveness of each method varies as long as it ensures your company's growth.
Benefits of Small Business Accounting and Tax Services
Starting your small business in a fast-paced, competitive world can be overwhelming, especially when you have little to no knowledge about accounting and taxes. But with the right partner, you won't have to worry about these problems.
Here are some of the great perks of accounting and tax services.
Professionals will meticulously record your data.
Even if you have just launched your small business, recording all the money coming in and out is important to keep it afloat. And when it comes to recording business data and overseeing your entire business process, no one can do it better than a professional itself—a bookkeeper.
Bookkeepers see to it that each financial transaction you make is tracked and recorded into your books. Thus, hiring a bookkeeper to handle all your financial transactions is a great investment.
You can generate better business strategies.
Through the meticulous recording of your bookkeeper, you will have a better grasp of your business metrics and make better business decisions. Bookkeepers can provide in-depth analysis and financial reporting, which helps in benchmarking.
In addition, bookkeepers can help you assess the strong points and areas for improvement for your company and give insightful advice on your next business strategy. That way, you will have the right professionals contributing to your company’s growth and development.
You’ll get foolproof inventory management through the use of bookkeeping software.
Businesses use many tools to keep their finances in check. One of these is accounting software.
Accounting software is a platform designed to process financial modules such as payroll, general ledger, accounts payable and receivable, balance sheet, cash flow, and taxes. So, if you are looking to make small business accounting and payroll easier, you can opt for accounting software.
Top Accounting Software for Small Businesses
As mentioned above, accounting plays a crucial role in the growth of your company. Aside from having a team of reliable and experienced accounting professionals, investing in an innovative tool can help with the timely recording of financial transactions.
Using accounting software like Quickbooks, Xero, and A2X can help your accounting team execute their respective roles. That is especially the case if you are running an ecommerce business.
Knowing how each tool fits your business can save you time and money. So, we have prepared the top picks for accounting software for you!
Quickbooks
Among the popular accounting software nowadays, QuickBooks provides comprehensive introductory packages with basic accounting services such as inventory management and financial reporting. QuickBooks is also the best option for small businesses, offering an array of affordable subscription plans to fit your accounting needs and preferences.
Highlights
- User-friendly
- Accessible from most devices
- Budget-friendly, best for small businesses
- Provides accurate financial reports
- Easy resolution for customer issues
Xero
Now, if you are looking for accounting software that caters to a larger number of users, Xero is your best bet! Xero is one of the leading web-based accounting software built for small and rapidly growing businesses. The software has over a million users worldwide.
Highlights
- Cloud-based platform
- Offers a 30-day free trial for you to know more about the accounting system
- Accepts unlimited users
- Very scalable, which makes it the best partner for your business growth
- Has a built-in payroll functionality
- User-friendly interface for better navigation
- Accessible anywhere on any device with a stable internet connection
A2X
For ecommerce businesses with dedicated accounting staff, A2X is the best pick. A2X offers an all-in-one accounting system that gives you full control over your business’s financial transactions and inventory management processes.
Highlights
- Proven to be effective in managing inventory and transactions for new ecommerce businesses
- Offers faster, easier invoicing and accounting processes
- Allows you to manage your inventory via desktop or mobile devices
- Easy to set up and use
- Fast customer service assistance through chat, email, and phone call
As you can see, accounting software is a great asset to your overall business growth. Although accounting for your business can be daunting, these tools can handle it for you. That way, you can stay focused on your plans for your company's growth while entrusting the financial information and analysis to the experts!
Final Thoughts
Keeping up with all the accounting and tax requirements can be difficult if you're a small business owner. But, with today's high level of competition in every industry, your success hinges on how well you can manage your money and expenses. That is where small business accounting services come in!
We at Unloop offer ecommerce bookkeeping services to help you manage your financial transactions and give you detailed analytics for your next step toward business growth.
If you need help from accounting experts, call us at 877-421-7270, and we will offer you quick support.