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Accounting software is utilized by accountants and finance professionals to automate their manual workflow. Accounting software offers many benefits such as speeding up the information retrieval process, bringing competence in bank reconciliation processes, automatic preparation of Value Added TAX (VAT) / Goods and Services TAX (GST), and to provide an opportunity to see the real-time state of the company’s economic ranking. The functioning of the software may vary from product to product. Larger organizations may opt to execute a more personalized solution, which integrates an enormous amount of data from diverse sectors. Smaller firms usually opt to choose an off the shelf product.

Software enables thorough tracking of financial dealings and immediate analysis and reporting. Prior to the founding of accounting software, accounting tasks were performed manually, with the help of massive transaction journals. With the introduction of accounting software these manual accounting tasks were automated resulting in a cost efficient accounting system; while allowing ample time for financial decision making.

Benefits of having an Accounting Software

  • It automatically calculates journal entries for the Balance Sheet and Profit and Loss Statement.
  • It is easy to transfer the data to accountants and auditor.
  • Bookkeeping software has embedded useful tools and functionalities to analyze business and perform financial analysis.
  • Journal entries, drafts, invoices, and financial statements can be automatically printed in good and professional format for accountants to use or for auditors to read.

Importance of Accounting Software

While making a company, accounting cannot be skipped. Owners must be good at numbers and learn how to read, make, and understand financial statements. In making financial statements, accounting software can be used as per the requirement of the business.

As a startup, owners are occupied in the tasks of hiring employees, looking for apt business locations and implementing legal paper works. The last thing on their mind is to pore over the mountain of receipts, invoices, bills and expenses at their desk. However, there are numerous accounting software that can handle these tasks. At the closure of each month and each annual fiscal year, business owners need to close entry. After which they must create and submit the balance sheet, and profit and loss statement. In a day, there could be hundreds of transactions taking place; there are several options such as Excel, but the fastest and most competent way to handle accounting is to use accounting software.

One can also opt to contract out the tasks of bookkeeping to accounting firms. However it is important as a business owner to know how to read and make financial statements so that financial status and condition of the business is in the knowledge of the owner.

Three Major Types of Accounting Software

Database Accounting Software

This type of system is used by multi-million dollar companies’ large corporations. Data is more secured since businesses need to have a large database to install this type of software. Oracle accounting software falls in this category. One needs to hire system engineers and consultants to install and get this type of software operating within the business workflow. Basically, this type of software can handle financial management, more complex tasks, large network and complicated accounting functions.

Installed Accounting Software

In areas where internet connection is slow and limited, businesses can take advantage of accounting software in the form of CDs or DVDs, which need to be installed in the desktops or laptops.

Cloud accounting software

These accounting software are available online and data can be accessed through the internet or cloud. Examples of the cloud-type accounting software are Fresh books, QuickBooks, Sage 50 Premium and Accounting 2015.

Future of accounting software

Cloud accounting will play a major part of accounting software. The ability of carrying, accessing and managing data across the globe is already benefitting entrepreneurs from around the world, whose accountants and advisors are able to work on the same set of numbers from remote locations.

Another major advancement is the automation through connected (API—application program interface) –which updates automatically as the invoices created by owners for their customers and appears in their accounting system as a payable. To make accounting more readily available, accounting software is focusing on workflow systems. Where one could simply take a picture of their reciept, and the software automatically read it, turn it into data, enter it into their books, and assign it to the proper account. The future may hold much more technologically sound and advanced features for the accounting software to imbibe however, the present scenario is more focused on improvement of the same.

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