So, you’ve been seeing lots of accounting software all over the inter-web lately. We have also noticed the huge changes in accounting operations.
Why all the fuss, suddenly? Well, these changes come from growth in accounting technology and artificial intelligence.
Accounting technology gives us the ability to manage accounts and perform accounting operations quickly and more efficiently.
Pros of Using Accounting Software
Many professionals use computer software and mobile phone applications to speed up their work.
We noticed that these software packages and apps are helpful to:
- track your transactions
- categorize your income and expenses
- calculate your taxes
- facilitate your bill payments, and
- create your financial reports.
Being able to automate all these accounting processes is the most important benefit of using accounting software.
When you automate, you can easily generate your accounting documents such as invoices, and account statements.
Your financial reports can be generated so much faster.
All your financial data will be posted to their respective financial ledgers or accounts automatically. This will help you avoid manual errors and ensures consistency and integrity.
Cons of Using Accounting Software
Unfortunately, you will have to manually enter your data into your accounting software.
This is a problem because if your data is not checked for accuracy and completeness, the reports generated by your accounting software will have mistakes.
Many of the accounting software packages on the market today, need to be customized to match your business requirements.
You will have to train your employees to access and use the accounting software. This is going to be a financial burden on your company or take a lot of your time or BOTH.
When tax rates and rules change, your accounting software will need to be updated to avoid errors.
Power failures, computer viruses and hackers are threats to your computerized systems if you don’t put proper precautionary and security measures in place.
These security measures are necessary and are not cheap.
Pros of Hiring Accountants
1. Accountants Know What They’re Doing
There are a lot of technical details that go along with managing a business’s finances.
And even a simple mistake like putting an extra zero or omitting a figure when capturing an invoice has a big impact on the outcome of your books.
This is very true when it comes to filing your taxes, since inaccuracies or accidental omissions could end up attracting a great big red flag from SARS.
An accountant’s job is to make sure all of your records are error-free and that numbers add up the way they’re supposed to so that you don’t end up in hot water with SARS.
2. Accountants Can Save You Time and Money
Your accountant wants to see your business succeed. One way to do that is by looking for unrealized savings.
For example your accountant may review your monthly accounts to see where there’s room to reduce expenses or come up with a way to streamline record keeping so that it’s less time intensive.
Your accountant is the one going through your annual financials doing a tax computation to uncover every possible tax deductible expense.
It is a major advantage to have an accountant in your business. A reliable accountant will also allow you to dedicate more hours to expanding your customer base.
You can use this extra time to develop new products, or improve your marketing strategy.
3. Accountants Do More Than Just Punch Numbers
Yes, your accountant will balance your books, but he can also offer expert advice.
You can learn everything from determining your pricing structure to obtaining financing, from your competent accountant.
If you decide that you need to close your business or sell it, your accountant can advise on the best way for you to proceed.
This kind of input can be invaluable, especially if it’s your first foray into entrepreneurship.
Cons of Hiring an Accountant
1. Accounting Services Aren’t Free
Your accounting firm will expect to be paid for the work they do.
You will find that accountant’s rates vary based on what you need done.
What you end up paying may be lower than accounting software. The cost will depend on what kind of business you have or how good your relationship with your accountant is, but the bottom line is you’re still increasing your overhead by hiring one.
You can reduce this cost by hiring an accountant on a part-time basis.
2. Using An Accountant Is Not A Guarantee Against Mistakes
Accountants, like everyone else, are humans and there’s no way to guarantee they won’t make an error at some point.
If this mistake is something small that can be corrected quickly then it’s usually not a big deal.
But on a larger scale, it may be problematic.
For example, an accountant could be importing your expense information into their accounting software and a key expenditure isn’t transferred.
If they don’t pick up on it, when it’s time to do your tax computation and file your tax return, you may miss out on a valuable tax deduction.
This is unpleasant in itself but it will also make your tax liability higher than it needs to be.
An easy way to avoid this is to hire an accounting firm with 2 partners who check each other’s work for mistakes.
3. It’s Easy to Lose Touch
Delegating your small business accounting to someone else makes sense when you are stretched for time.
You should be spending your time trying to grow your business. But this doesn’t mean you can take a completely hands-off approach.
Even though your accountant may be doing all the heavy lifting, it’s still your responsibility to check in regularly.
This will help you make sure things are moving along smoothly. The relationship you have with your accountant should be a partnership.
You should both play an active role in managing your business’ finances.
Look for an accountant who will schedule regular appointments with you, to keep you updated and involved in your business’ financial health.
For more tips on hiring a new accountant, check out our list of essential questions to ask your new accountant.
Conclusion
If your business is small and you have the time to manually input all the data you need into your accounting software then using a good software package may just be all you need.
But, if your business is growing and you need help understanding all the tax implications you have and all the deadlines seem to hover ominously, then finding a good accounting firm can remove a great deal of stress from your life.
Remember, a great accountant can actually save your business money.
Take a look at where your business is and what the scope of your needs are. This is the best way to guide your final decision on whether hiring an accountant is necessary or whether you can do it yourself with a good software package.
