Unless you have a well-established business with enough money to hire people to manage your accounts then financial management is something that you will have to do yourself if you want to keep costs to a minimum. For many micro or small business this is the only option they can realistically choose.
Many small businesses, particularly individuals that operate as a sole trader or do freelance work, keep track of their finances by using spreadsheets rather than using accounting software. This is probably the most basic and cheapest form of financial record-keeping available. Although it does the job, a spreadsheet is basically only a glorified calculator. When using it to calculate something, incorrect formulae may cause every calculation on the sheet to be wrong. It is also difficult to do much with the data that you are generating.
In contrast, accounting software will allow you to create reports on many aspects of your inputted data. The reports often have graphical representations, therefore making it far easier to interpret at a glance. Creating these reports any other way would take a long time, but accounting software makes the process instantaneous.
Although convenient, storing all of your accounting records in an excel document on your personal computer is not adequate protection. Loss of data is a problem that many small businesses very rarely think about, until it actually happens to them. The consequences to your business if you lose financial records can be massive and make end-of-year tax submissions a very stressful process.
WinWeb recommend that even freelancers and micro businesses take their financial records online as soon as possible for the extra security and convenience it provides. For those that only want an uncomplicated record of transactions – essentially an online version of their spreadsheet, but with many added extras – should try out Cashbook Software. For businesses that require full tri-ledger accounting, an Accounting Software application would be more suitable.
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