Why Do You Need To Computerize Accounting Process?

Computerized Accounting

Over the centuries the traditional way to keep accounts was to use calculators and pen and a set of paper books, which worked fine for the businesses at that time. You may still keep the manual recording for your small business accounting.

But with today's changing world and computerization are widely used, there seems no need to have to take the manual way. The computer system should be able to perform these basic tasks in a flash and keep you up to date. Computerized bookkeeping removes many of the paper "books" that are used to record the financial transactions of an entity. Instead, relational databases take their place, but still typically enforce the double entry bookkeeping system and methodology. At this time you are wondering whether you are going to computerize the process, especially if you’ve clearly outgrown your paper bookkeeping system. 

How can accounting software help you and what is the benefit of the computerization? Accounting software makes maintaining business accounting easy by computerizing the accounting system and providing simple interface between you and the accounting system. Computerized accounting systems have helped to greatly reduce mathematical errors in the accounting process. 

There are lots of benefits in computerizing your accounting system if you have a small business. Automation reduces time of lengthy manual processing, eliminates human involvement in some stages of accounting process, reduces errors caused by human intervention or multiple manual processing, provides continuously up-to-date reports, and so on. They mean you're sure to increase efficiency and accuracy that eventually lead to saving time and money.  After cutting cut your accountancy fees and time, what’s more? The computerizing frees up time and energy that otherwise would be spent in manual handling. Now you can make use extra time and energy to concentrate on managing and growing your business.

Accounting software help you to maintain lists of customers and vendors in a database designed for finances that otherwise you would maintain on an index card, as a Word or Excel documents, or in Outlook. 

Accounting software contains record formats that let you type in or import relevant customer and vendor details, things like contact information, credit terms and limits, credit card numbers, and price levels. You can usually set up custom fields to track any additional information you'd like to. Customer records can also contain descriptions of jobs you're working on for that company; they may even display a history of your transactions with them.

Thanks to vendor database, accounting software keeps you in the know about whom you're buying from, to whom you owe money, and how much you spend to pay certain suppliers.

Take some time up front to enter information about your employees and assorted taxes and deductions into the accounting application; and it does the rest to keep the data in place until they are ready to be processed for paying payroll and the related payroll taxes.

You use windows on your monitor’s screen to record common business transactions, such purchasing, selling, and paying payroll. 

You use a bill window to record bills you receive from vendors or an invoice window that looks like an invoice to bill some customers or clients. You simply need to fill in the blanks of the window with bits of information like the invoice date, the amount, and the person or business you will pay or bill. In a similar fashion you use a window that looks like a check to record a check you’re writing to pay suppliers.

With accounting software, payroll processing will involve little more than entering the hours everyone worked and printing paychecks or authorizing direct deposit. When it's time to pay payroll tax obligations, the software will make those calculations, too.

By keeping inventory records in the accounting software, you'll have detailed descriptions of everything you have for sale. When you sell something, the software will decrease the level you have on hand. It'll give you updated inventory level at anytime and also remind you that you're running low, so you won't be caught short or have to go into the back room to see if you have any to sell when a customer orders something.

Accounting software systems help you with speedy process of producing or printing forms such as checks or invoices by using the information that you enter into those check windows and invoice windows. 

Accounting program also save your time and money by its electronic banking and billing capabilities. The computerized accounting system transmits and retrieves some financial transaction information electronically. For example, you can email invoices to customers and clients directly from the system. It can also share bank accounting information with most banks, making it easy to make payments and transfer funds electronically. 

Clearly there are some other things that computer can do faster than human, such as producing reports. You are able to obtain reports easily and quickly using accounting software. 

When you record business transactions by filling in the blanks shown on computer screen, you supply the information that accounting software package needs in order to prepare the financial statements and other reports that summarize your financial situation or business performance. The software works automatically on the background to record all transactions that have been entered into the system. The system maintains the record keeping in accordance to the law and the accounting standards to produces reports in a certain formats for certain purposes. 

The reports provide you with invaluable information to manage your business for more efficient and profitability or to plan for business growth. They also establish basis for income tax calculation.

If you decide that computerizing the process is the way to go then you need to decide what accounting software package will suit your needs better. The cost may be an issue, so you need to decide on your budget and how your business is likely to expand. There are variety off-the-shelf applications in the market. Among popular accounting software packages are Intuit QuickBooks and Sage Peachtree.