It is often the case that small business owners don’t consider the importance of a well-structured General Ledger for their accounting system when starting up a new business. More often than not, small business owners will concentrate on the operational elements of the business and neglect to organise the financial records. Nevertheless, disregarding management reporting may lead to serious accounting problems, and perhaps most importantly, may lead to business failure.
Medium to large companies will frequently conduct meetings where financial accounts are presented and discussed. This is done so if they have any issues, it can be addressed in a timely manner. As small businesses, especially self-employed businesses, don’t have the time or resources to conduct such meetings, it is important that they use an Accounting Software system that has the ability to easily produce important Financial Statements and other reports highlighting the business’ financial position. While the financial state of a business is a critical area, it is often missed by small business owners due to the use of ineffective software that doesn’t easily produce important financial reports.
The financial state of a business can be generated manually or automatically using business accounting software. The main objective of setting up accounting software for managing companies’ financial information, is often to satisfy taxation requirements. A business accounting software with comprehensive and user friendly tax lodgement functionality makes the tax lodgement process simpler, error free and more efficient.
When considering a business accounting software, there are a few checklists every Australian business owner should contemplate. They should create a matrix checklist and review this checklist by themselves or by a preferred accountant.
A sample matrix checklist for Accounting Software is given below:
1. Accounting – Compliant with ATO & Government requirements
2. Reporting – Compliant with ATO & Government requirements
3. Purchasing –
(i) Ability to include workplace conditions/ workforce profile/ factory visit observations
(ii) Compliance with labour standards & codes quotes
(iii) Dual authorisation
(iv) Report # days taken to pay suppliers.
4. Inventory –
(i) Real time monitoring store/storage,
(ii) Automatic order level triggers.
5. Recording jobs: Job no’s/ codes
6. Customers –
(i) Trade terms,
(ii) Credit limit – auto flag for breaches
7. Payroll –
(i) Full time/ part time / temporary/ casual/ contract,
(ii) Salary package/ staff numbers/ rosters (time cards),
(iii) Allowances – travel / meal,
(iv) Contract staff – auto notification of end date approaching
(v) Ability to liaise with ESS for payslips / bank a/c details
8. Business growth – Will the software grow with the business in the next 5-10 years? Does it have the capability to increase customer base, supplier base, payroll personnel?
9. Multicurrency – Does the system have the ability to support multicurrency, such as AUD, NZD, UK Pound, Euro, USD etc.
10. Backups – Ability to go back a day’s work, regular backups and ability to import & export all data to popular software like excel
11. Support – Does the software company provide support and regular updates?
It does not matter whether it is a small, medium or large business, every owner generally loves the word “growth”. A growing business is a thriving business and the best way to report on this is via a good Accounting Software system.
Sapphire Single user and SapphireOne Client Server are a good Accounting Software system that grows with your business. The system’s intuitive navigation and procedures, help to improve the efficiency and productivity of your business.
Discover how SapphireOne ERP, CRM and Business Accounting software suite can help your business by requesting a live demo.
Read from Inside Small Business – https://insidesmallbusiness.com.au/growth-development/wrong-accounting-system-may-lead-business-failure