Ask anyone who runs a small business and they will tell you that there is so much to think about on a daily basis that it is easy to become overwhelmed.
It often seems as though the day is full of tasks that have to be carried out to ensure that the business can service the needs of its clients, never mind administrative duties such as keeping the balance sheet up to date.
As an example, let’s take a look at a freelance website designer.
A normal day will often see them traveling to meet clients, working on website design projects, prospecting for new work, and taking the time to keep abreast of the latest software that can help them with their business.
Basic bookkeeping for the business can end up taking a backseat, which can have a detrimental effect on the business and end up turning into that dreaded scenario where the business owner is rushing around at the last minute in an attempt to get their tax returns filed in time.
Pick any type of business and exactly the same will apply – everything seems to be a rush, so it makes sense to look for ways to streamline the business, especially when it comes to using an accounting system that resolves many of the headaches relating to business accounting and bookkeeping.
The many advantages of keeping your balance sheet up to date
Apart from the obvious benefit of not being penalized with a failure-to-file penalty, keeping your balance sheet up to date is a great way to spot potential problems before they get out of control.
For instance, a client may be taking longer to settle invoices, which could be because they are busy themselves or it may be that their business is struggling.
Either way, if you are not keeping your balance sheet up to date, these late payments could go unnoticed until it is too late.
What if you are taking longer to pay suppliers though?
An up-to-date balance sheet will alert you to any payment that is due which, if not paid, could result in your business running out of stock, or even worse, you could be flagged up as someone who is not reliable because you don’t pay suppliers on time.
Using a cloud-based accounting system
A cloud-based accounting system offers users so many benefits, especially freelancers of all ages who are often able to combine travel with their business activities.
The cloud-based accounting system enables users to access their balance sheet at any time, provided that they have an internet connection, and be able to obtain a visual profit and loss balance sheet to make sure that everything is as it should be.
Using the formula ‘assets – liabilities = owner’s equity’, the business owner will know exactly where they stand and be in a position to nip any potential problems in the bud.
Another benefit of using a cloud-based accounting system that is often overlooked is that you will always have access to the latest version of the software.
If there are any changes within tax law, the software will be adjusted accordingly, so you won’t have to worry about updating it yourself.
How many times have you read about a business owner who has filed an incorrect tax return because they are simply not aware of any changes that have been made?
As this would not be regarded as a valid excuse, financial penalties may be imposed, which would not have been the case if a cloud-based accounting system had been used.
The eco-friendly nature of a cloud-based accounting system should also be mentioned – an average-sized office will produce enormous amounts of waste paper per employee, not to mention the number of print cartridges that are assigned to landfill sites each year.
It does not take much imagination to estimate how much of this waste is related to accounting, so cloud-based accounting systems can save businesses a great deal of money over the course of a year.
Conclusion
Gone are the days when the only way that a business owner could check their balance sheet would be to load up the accounting software on their PC, or search through physical books and files in order to determine the financial position of their business.
Thankfully, cloud-based accounting systems mean that it doesn’t matter if you are traveling or working from an office – you will always be able to see the state of play regarding your business.
The ability to instantly provide clients with any up-to-date data they may require could quite easily result in more business, and when the enormous savings regarding paper and printer cartridges are also taken into account, using a cloud-based accounting system becomes something of a no-brainer.
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