Running your own business can be tough, and one of the hardest parts is keeping an accurate record of your income, expenses and receivables. Accounting software promises to take the drudgery out of keeping the company books, but it is important to look at both the benefits and the potential drawbacks of this automated approach to bookkeeping.
Easy to use
Accounting software is generally quite easy to use, even for those without an accounting background. The best accounting software uses simple forms, combined with a question-and-answer format, to keep accurate and up-to-date records on the payments the company has received and the expenses it has incurred. Accounting software also includes the ability to print and track invoices and accounts receivables, all with a program that is as easy to use as a spreadsheet.
Integrates with tax software
One big advantage of accounting software is that it integrates so seamlessly with many of the popular tax-preparation software packages. When choosing a piece of accounting software, it is important to look at the list of compatible products to be sure the information entered into the program can be easily transferred to the tax-prep software you use. This will allow you to easily import your accounting information, including income, expenses and deductions, right into your tax software.
Not the same as an accountant
Perhaps the biggest downside of using software for your accounting is the chance that you will miss an important deduction, or a vital legal requirement, that an experienced accountant or CPA would spot in an instant. While accounting software is a good way to keep the books for your family or your company, it is not a substitute for true accounting expertise. Many business owners use accounting software to run their operations, while at the same time seeking the advice of an accountant for more complicated matters. Even those who use accounting software for everything often turn to a CPA to review the information and look for possible tax breaks the software might have missed.