Did you know that more than 35 percent of startups fail to take flight because they are not pro in money matters? Unfortunately, the truth is, many new businesses succumb to failure in the early stages itself because they do not have the cash flow required to fuel the company’s day-to-day operations and expenses. This predicament doesn’t have to be the fate of every new business on the horizon. How? Well, so long as startups have credible and reliable accounting software, financial blunders are avoidable. With the last quarter of the fiscal year underway, many startups grapple with year-end financials. Are yours in good order? If the answer is no then, this blog will give you all the inputs and insights that will inform you as to why accounting software is a must to avoid year-end accounting faux pas and convince you to go and purchase one right away!
Here are all the top three notorious accounting goof-ups you will not have to face if your business uses accounting software and tools.
Three Main Financial Statements: Believe it or not, many new business owners are scratching their heads trying to wrap their minds around their company’s financial statements. As a result, startup owners often face trouble with the generation of precise financial statements. Every company’s accounting stats are represented by three financial statements – Balance Sheet, Income Statement (Profit & Loss), and Cash Flow Statement. Each of them is interlinked and poles apart at the same time. As the year closes, the Balance Sheet, Income Statement (Profit & Loss), and Cash Flow Statement are must-haves. These documents are the fundamental and most essential indicators of your company’s yearly performance, profitability, and overall health. When you invest in accounting software, the pre-installed tools and technologies make it easy for you to keep tabs on your company’s financial movements, and the statements can be generated and accessed any time you want.
Tax Calculations: It is commonplace for startups to fumble when doing (manual) tax calculations. Contrary to the misplaced belief that tax calculations are easy to calculate as it is at 5%, it is your business structure that determines how and when to pay. As a startup, you need to identify your business bracket and then calculate the 5% tax accordingly. To achieve this, automated and all-integrated accounting software is the best-go-to solution. It will help in balancing your accounts properly while calculating your VAT.
Invoice Management: One of the most daunting challenges that new businesses face is handling the flurry of incoming invoices – especially in the first year. In all likelihood, your clients will not pay an upfront payment in full and so you must hand out credit invoices to them. Now, to keep up with account receivables (pending invoice payments) in the last quarter can be quite daunting. With accounting software, however, startup businesses can effectively manage invoices; the pre-fixed invoicing tools in the software will not let you fall prey to invoicing mistakes.
Remember, accounting is said to be the mother tongue of business (money talks, remember?) and luckily, in the digital accounting era, business owners do not have to have an accounting degree or diploma to learn and understand numbers and calculations. With the right type of accounting software at your disposal, you can ensure that your year-end financials are streamlined, and therefore you are presented with an accurate portrait of your business’s health in the current fiscal year.
With the last quarter underway, we would recommend that you buy accounting software for your business. Our team will assist you in finding the perfect accounting solutions. Contact Rockford Computers LLC today!