Question

Justify the use of computer software programs like Intuit QuickBooks, Microsoft Office Accounting, and Peachtree Accounting by small business owners.

Answer 1

Business owners need to have a way to keep track of money being spent as well as the money coming in. Lack of proper recording and keeping up with accounting can hurt a business as business owners may fall short of money when it is time to pay employees or to perform any other business function. Business owners prefer to use accounting software as they can perform various accounting functions with accuracy.

Bookkeeping is necessary for financial analysis to monitor expenses and for business success. Accounting is not just about managing credits and debits. It comes into play in almost every day business decisions than you realize. It is the process of recording all the financial transactions and events that occur in your business.

Purchases, sales, profits, payments and receipts are all recorded to monitor business cash flow. Accounting software allows keeping record of all business financial activities. If you give value to accounting only at tax time, you are missing an opportunity to get a true picture of your business performing financially.

Accounting software can help in the following ways:

1. Accounting software for small business allows monitoring your accounts receivable that shows behaviors in your customer base.
2. It gives understanding of your business financial position and helps in finding the problem areas.
3. It ensures effective cash flow management.
4. Accounting software helps you evaluate the performance of your small business to know whether the business is stagnant, improving or depreciating.
5. Accounting software for small business is helping business owners to perform all basic as well as advanced accounting tasks successfully.
6. It also allows owners to determine business profitability.
7. Tech savvy business owners prefer to use accounting software as digital bookkeeping gives quick calculations as compared to manual calculations.
8. Most of the accounting software ensures that you are meeting tax requirements with their GST ready features.