New to Accounting? How a Cloud-Based Application Can Help
Double-entry accounting is a difficult concept for most people who aren’t accountants to grasp. But it’s the system that businesses in the U.S. use. If you’re just launching a business and anticipate that it will grow, you’ll find that you’ll need to have at least a nodding acquaintance with its concepts when you start dealing with financial advisors and banks and investors and anyone else who needs to know about your company’s fiscal health.
So now’s a good time to learn about it. Except that you don’t have to master it, thanks to two things: cloud-based accounting applications and the financial advisors who support them.
Working in the Background
Cloud-based accounting applications are designed for small businesspeople like you: individuals who have not studied double-entry accounting, but who need to use it to manage their companies’ income and expenses. They’re designed to work like other applications you’ve used. You find your way through the sites by using understandable navigation menus, entering data in fields and making selections from drop-down lists, and clicking on buttons.
Cloud-based accounting applications use simple language and familiar design conventions to make it easier for non-accountants to use.
Rather than forcing you to enter balanced debits and credits for every transaction, which double-entry bookkeeping requires, you work much like you would on paper. You create invoices and authorize payments and pay bills and do any other accounting-related tasks necessary, while the application handles the debits and credits in the background. You never have to encounter them.
These sites are designed so that forms like sales receipts and purchase orders look like forms you might fill out on paper. They do all of the calculations. Keep everything organized so you know where you need to go to find a customer’s payment terms or an employee’s paycheck deductions. They tell you when you’re doing something wrong – usually when you’ve omitted an important detail. They use friendly language wherever possible and don’t present you with arcane, unfamiliar accounting language.
They work like you do.
You may have seen desktop accounting software in boxes at an office supply store or big-box retailer. You can still buy small business financial management applications that you install on your hard drive. But accounting is moving onto the internet, and there are many benefits to working with your income and expenses there. For example, you can:
- Build detailed records containing information about your customers and vendors, employees, inventory items, and services.
- Create customized, polished forms like invoices and purchase orders using that information, so you never have to enter the same address or product name or sales tax rate again.
- Accept credit card and e-check payments online.
- Find any data stored in your company file in seconds.
- Generate the reports that will help you make better business decisions.
Granted, you can accomplish the same things using desktop software. But you can’t access your desktop accounting application from any web-enabled computer or mobile device. You’re limited to using the product only on computers where the software and your company file have been installed on the hard drive.
This is the number one reason for selecting a cloud-based application. Wherever you are, you only need a PC or mobile device to look up a customer or create an invoice or pay a bill.
There are other reasons to go with a web-based solution. You don’t have to pay hundreds of dollars upfront: Accounting websites charge a modest monthly subscription fee, and you can cancel anytime. Bug fixes and product updates occur without you having to do anything. You critical financial data is always backed up to offsite equipment that uses bank-grade security.
You can invite your financial advisor to the site so he or she can help by creating critical financial reports, helping you reconcile accounts, and offering analysis, training and ongoing support. Accounting solution providers have worked hard to simplify what is a very complex process, but there will still be times when you’ll need to call on an expert for help.
Finally, the internet is where the future of accounting lies. You can get add-ons for desktop software that provide added features in areas like billing and inventory. But those integrations can be difficult to set up and maintain. Cloud-based accounting applications were built to connect to related apps, so there’s more innovative development going on there. Why not start where you’ll end up anyway?