Many small business owners devote a large chunk of their time in the first quarter of the year to tax preparation, time that could be better spent managing and growing their company. Without proper planning, an unexpectedly large tax bill or an additional set of new filing requirements may seem to appear out of nowhere. To help decrease the annual tax workload, cloud accounting for small business provides a user-friendly double-entry accounting system which generates financial data and support needed for IRS filings.
Provides an Instantly Updated Financial Picture
With cloud accounting for small business, there’s no need to wait until year-end to gain an accurate picture of a company’s profit and loss. Data is maintained on a real-time basis. As soon as sales or expenses are entered, financial reports can be updated and reviewed. This provides management with the financial support needed to make critical decisions about their business at any time during the year. By reviewing profit and loss reports in the months prior to year-end, a clearer picture of potential tax liabilities is available. During years of greater-than-normal profit, cloud accounting systems give small businesses the advance notice needed to take advantage of a positive tax position. Companies may choose to shift expenditures such as upgraded office furniture or new technology from one tax year to another depending on expected profit.
Maintains Updated Expense Records
Rather than allowing a shoe box of receipts to pile up until year-end, cloud accounting for business captures and records expenses anywhere, anytime, even on the go. Allow employees to enter receipts at their desk or when out of the office, whichever is more convenient. Plus, at the end of the year, having all profit and loss data neatly organized in a software system means tax professionals spend less time inputting and reconciling financial statements. This savings may even be returned to you in the form of reduced tax prep fees.
Better Expense Classification and Approval
Online accounting systems allow expenses to be input and categorized into appropriate line items for tax reporting purposes. To reduce data entry time, an employee’s company credit card can be connected directly to a cloud accounting system, allowing business-related transactions to be captured and tracked as they occur. Internal controls are increased by allowing management to review employees’ spending and ensuring company credit cards are used solely for business purposes.
Get a Jump on Tax Planning for Next Year
In the midst of a busy tax season, many small business owners focus on meeting current deadlines and forget about planning for the next set of tax-year challenges. Yet, the beginning of the year is the best time to implement a new cloud accounting system. The sooner changes are made, the less data input is required to catch up on prior months’ financials. Plus, starting off the year with a newly organized data system will guarantee enhanced efficiency for the rest of the year. No more searching through piles of invoices to follow up on customer requests — all sales data can be at your fingertips with the touch of a button.
As the new year is underway, why not take the opportunity to sign up for a free trial of a cloud accounting system? For one low monthly fee, cloud accounting systems provide a user-friendly small business bookkeeping system with bank level security and world class customer support.