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FIFO vs. LIFO method: Definitions, Differences, Examples, Advantages and Disadvantages

FIFO and LIFO are two accounting methods for valuing inventory. FIFO is considered to be superior, but LIFO also has its merits. This post discusses both methods and provides an example that...
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The Advantages of Using an Accounting Software

Still using a shoebox and notebook approach to accounting? Accounting software provides a way for you to keep all of your data in one place electronically. That can mean better reporting, better accuracy, and better quality of work. Read this if you’re getting ready to retire the shoebox or excel spreadsheet and upgrade the way you handle your finances.

The Advantages of Using an Accounting Software with ZarMoney

Accounting software isn’t a new technology. Ever since accountants have been meticulously recording transactions on general ledgers manually and using adding machines to report the numbers to management, it was clear that a better solution had to be made. Companies deserved an easier way to record data that provided a more accurate financial picture for the company. While electronic spreadsheets could handle quite a bit more than their paper counterparts, a better solution started to emerge. Accounting software today is lightyears ahead of the shoebox method.

That shoebox is still fine and that it provides you with all you need? Check out our back-to-back comparison of two players in the field of accounting solution, Quickbook and ZarMoney, check for their features, pricing, integrations and automations and try to tell yourself again that shoebox provides you with all you need. 

Besides, here are some of the best advantages of using accounting software.

Faster, More Accurate Data Entry

One of the best reasons to implement robust accounting software is the peace of mind you’ll get from faster and more reliable data. Accounting software helps speed up the data entry process and helps accountants efficiently record all of the company’s financial transactions. The biggest benefit is the reduction of manual work on the staff. Since many calculations are done within the software, there is less opportunity for human error. All of this means that accountants can spend less time on manual entry and more time on value-added tasks, like data analysis, tax refunds or bottom-line improvements. 

Improved Cash Flow Picture

Using accounting software can paint a true, up-to-date picture of a company’s cash flow. Since incoming cash and expenses are recorded in the same system, it’s easy to see the company’s projected cash flow. Accountants can verify that the company has enough cash to cover current expenses and make adjustments as necessary. Plus, accounting software will keep a past record of all invoices paid and incoming cash, which helps create cash flow projections to help management make more informed business decisions.

That you don't need cash flow reporting in order to make a better decision? Let us convince you in our guide What Is a Cash Flow Statement And How Does It Work? here. 

Comprehensive Reporting

Accounting software can craft impressive reports using the consolidated data from throughout the system. Since all the company’s financial transactions are housed in one place, it’s easy to pull certain types of transactions together and create robust reports for people throughout the company, or third-party stakeholders, to use. 

Not only will financial statements and annual reports be easier to produce and faster to create but they will also be more accurate and insightful. With the added capacity, accountants can use the time they were spending pulling data to create reports and redirect it to telling a story with the data. Now, accountants can focus on analyzing the reports rather than just presenting numbers on a page. This means leaders can make better-informed decisions and help the company continue moving forward. 

Centralized Financial Data

The sales team has its data. Marketing has its data. The production team has its data. Accounting is in the middle trying to make sense of it all while throwing data into spreadsheets and hoping it adds up correctly. Accounting software eases those pain points for all departments. Using software companies are keeping all financial data in a centralized platform for the entire company.

Plus, this increases collaboration throughout different segments of the business. Now, accountants can become better business partners to the sales and marketing teams by providing them specialized reporting and analysis on their data. 

Aren't your accountants on track with their tasks? Check our guide on 5 things your accountant should focus on today. 

Improved Tax Visibility

Tax season is always stressful, but accounting software can make it go a lot more smoothly. Instead of chasing down data and trying to get everything together in a hurry, accounting software houses all the right information that you need for tax time and logs it throughout the year. Accounting software can be customized to accommodate your business’s tax situation and use the tax codes relevant to your line of work. Then, as you record transactions throughout the year, the tax information is automatically logged. Come tax time, there’s no digging around for paperwork and numbers. The software has all the information needed.

And visibility in this isn't the only thing that matters. Taxes are an essential part of every business and an error in their submission is a path to a serious headache. As a bonus, with every new administration, tax laws will change, likely to adding on your responsibility list serious research in the field.

As for 2021, there is a whole list of changes coming (or not! so don't get happy or unhappy about some of them, as getting a new tax code approved and implemented is tedious work).

Key Changes In The US Tax Code By Biden Administration

  • Enact a number of policies that would raise taxes on individuals with income above $400,000, including raising individual income, capital gains, and payroll taxes.
  • Raise taxes on corporations by raising the corporate income tax rate and imposing a corporate minimum book tax.
  • Raise tax revenue by $3.3 trillion over the next decade on a conventional basis. When accounting for macroeconomic feedback effects, the plan would collect about $2.8 trillion the next decade. 
  • On a conventional basis, the Biden tax plan by 2030 would lead to about 7.7% less after-tax income for the top 1% of taxpayers and about a 1.9% decline in after-tax income for all taxpayers on average.

Learn more about Biden's tax plan in this resource by Tax Foundation.

Learn more about coming economic changes in our guide Tax Laws, Regulations And Other Market Changes Coming In 2021.

Bottom Line

Robust accounting software options provide companies with a huge opportunity to record and store all financial transactions in a centralized location. While it helps accounting be the source of all the financial data, it can also help improve collaboration throughout different departments. Accounting can take on the role as a trusted business partner and provide the insights that departments and leaders are looking for within the company.

Accounting teams that use software to record business transactions benefit from fast and more accurate data that is housed in one location. It becomes easier to create financial reports that senior leadership can use in decision-making processes and drive the company forward. Plus, the improved data and reporting give the business better visibility into cash flow and tax liabilities. Overall, accounting software helps businesses paint a clearer financial picture and improves decision-making at each level of the organization.

So now the question remains. Which accounting software should I use? 

This is an uneasy question, but we are here to help. In order to choose the best accounting software solution provider, one has to consider a couple of parameters: 

  • Is It Easy To Use?
  • What Are The Best Features?
  • Is It Secure?
  • What About Integration?
  • Is It Customizable?
  • Is It Accessible?
  • What’s The Cost?

Wow! That is a lot of questions to answer! And where do I even begin answering them? What do some of them even mean? 

Worry not. We have prepared for you a detailed guide helping you answer each one of these questions and more. Check out our guide The Best (Free) Accounting Software For CPAs, Accountants And Bookkeepers.

Now that you know what are you looking for, what are your options? Even here we have help for you, to orient yourself in the crowded of accounting software solutions. We have prepared for you a guide Top 5 Companies Leading the Accounting Software Solutions.

In this guide, you will discover pricing, availability and features of each of these best providers.

That you need even more help picking up the best one? That 5 is too much? Well, we got good news for you. We have prepared for you the back-to-back comparison of the 2 most important accounting solution providers, Quickbooks Intuit and ZarMoney.

Now it is only up to you to pick the one that will fit your needs. Did you know ZarMoney has a FREE trial, with no credit card details required, so you can try it out yourself without risking life-long commitment?

Start Free Trial Today!

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