Money fuels the business world, so regardless of whether you personally view it as a worthwhile goal or merely a necessary evil, you need to keep it at the forefront of your thoughts. Consider that entrepreneurs who just expect their finances to work out aren’t entrepreneurs for very long. You might not be able to control exactly how many clients you win or how much money you make, but you can ensure that all your sums add up and you know precisely where you stand.
There are two ways to approach this from a practical standpoint: you can handle everything through a pen, paper, and basic spreadsheets, or invest in accounting software specifically developed to chart and manage finances. The latter obviously sounds somewhat better, but is a commitment to the use of accounting software really something a first-time entrepreneur should be thinking about? Let’s review the pros and cons, as told by Kayleigh Alexandra from MicroStartups.
Pro: it offers purpose-built tracking, reporting, and even invoicing
Here are the biggest and most obvious pros of accounting software: it does precisely what it’s intended to do. It makes it relatively simple to log transactions, sum up revenue, calculate sales tax, create high-quality reports, and even automate invoicing. Any of those tasks could take up quite a bit of time for a new entrepreneur just trying to figure out their path, so majorly boosting the efficiency of all of them makes for an impactful boon.
Con: it can be tricky to learn
Even the easiest and most user-friendly software carries with it some kind of learning curve. How do you update that field? How do you track that metric? In trying to implement accounting software, you can end up rummaging through knowledge bases and blog posts for the answers you need to actually use the software. And if you can’t find them, then the entire thing can become a waste of time. This is very unlikely, though, because modern UIs are extremely straightforward — and because the value on offer makes initial confusion worth enduring.
Pro: it isn’t usually expensive
You can spend quite a lot of money on accounting software, particularly if you’re in charge of a massive multinational corporation — but that doesn’t mean you’re likely to. In most use cases, accounting software isn’t particularly costly, especially given what it brings to the table. There are also options that won’t cost you anything: for instance, Wave payroll is completely free for basic use, and you’re unlikely to have demanding requirements when you’re just starting out.
Con: it requires initial research
There are plenty of accounting tools on the market, each with pros and cons of its own. And while I could point you to various tools that I consider worth using, you’d still need to conduct your own research into how they work, how their tiers are priced, and what their limitations are. This research stage shouldn’t take too long, but if you’re really pushed for time trying to promote your fledgeling operation, you might struggle to schedule it — and just going with the first software package you see isn’t a good idea, since you might struggle to migrate from it.
Pro: it keeps data secure in the cloud
If you choose a great software accounting option, then your accounting software will not only make it easy to handle your data: it will also keep it secure and accessible when needed (data security is a must). This is the benefit of third-party cloud storage. When you keep your accounting details in a spreadsheet on your computer, you’re one drive failure away from losing them. With a team of accounting experts looking after your system, you can stop worrying and focus on other things.
On balance, it’s really hard to advise against investing in accounting software, even when you’re just getting started. Even the most occasional small business owners need to issue payments and send invoices, and the time it takes really adds up. With plenty of free or low-cost options available online, why not give it a try? If your operation really grows, then you’ll need accounting software eventually — might as well get familiar now.