The 411: Digital Accounting for Your Small Business

The future of accounting is infinite thanks to ever-evolving technology. The best and simplest way to stay relevant is to go digital. Thanks to artificial intelligence and the constant improvement of technology, eventually all areas of accounting will be digitized. Staying up to date on digital tools, softwares, and techniques regularly will ensure you never become out dated and left behind. 

What is Digital Accounting?

Essentially, digital accounting is the process of using technology to input, review, file, and save your data. Digital accounting relies on electronic versus manual processing. Rather than compiling data by hand on paper you can enter it into a computer program and then run reports, make calculations, file and save your information with a simple click of a button.

Making the Transition to Digital

Once you are fully invested in digital, it is easy to keep up. However, transitioning from all manual processes to digital will take well worth it time. To start you will want to review your accounting processes. A few questions to consider are:

  • How are you sending/receiving invoices? Although physical mail is still a common method of sending/receiving invoices, more and more businesses and customers are using digital invoices and digital payment methods. 
  • How are you storing your files and records? Rather than keeping and securing physical paperwork in an office or filing cabinet, start processing all of your data electronically. With proper software, this is more secure and makes organizing/locating files a breeze.
  • How are you processing your bookkeeping? Rather than doing all of your bookkeeping and reporting by hand using logs and ledgers, you can use a bookkeeping software or allow your accountant to access your books. Processing this electronically will help eliminate human error and make running reports quick and easy.
  • How are your employees’ payroll, timekeeping, and tax documents maintained? If your employees are using physical time clocks and paperwork to complete their direct deposit, W4s, and 1099s, then it may be time to consider payroll services offered by your accountant. Your accountant can get your staff setup with an electronic payroll service to manage their time punches, view time off/leave accommodations, update direct deposit and tax deductions. 
    • Payroll services is a huge benefit to employees which allows them to be empowered and informed about their personal information. Having happy and satisfied employees translates to better business. 

By answering these questions, you can determine the best route to take when it comes to going digital. You will want to invest in good bookkeeping and filing softwares. Once this is selected, you will need to transfer all of your physical files, documents, forms, etc, into an electronic file. You may be able to scan this into the system or you may need to manually transfer the data. When going digital, it is also a good time to meet with your accountant to see where they can assist you and offer their services. As mentioned above, payroll along with bookkeeping services are usually offered through your accountant. Contact the My Accountant Bookkeeping & Tax Service Inc team to discuss your options and find the best solutions for you. 

Benefits of Going Digital

  1. Save Money and Space:  By going digital, you no longer need file cabinets or rows and rows or paperwork. You can have everything on one program. You can reduce or repurpose office space and save money on the supplies you once needed such as paper, files, dividers, shelves, etc. 
  2. Convenience: When all of your important and necessary data is in a cloud based program, you get the convenience of accessing this information anywhere, anytime. That means for example, employees can view their paystubs even when they aren’t in the office. It also means you can share the data with any necessary individuals such as accountants or managers. Rather than needing to be in the office to review paperwork, you can login to your network from any secure server and be able to accomplish your work. Being digital also offers convenience for customers. Depending on your business, clients can communicate and get your products/services electronically.
  3. Improved Accuracy and Efficiency: With the help of technology, human error will be significantly lowered when your accounting is digital. Not only can the software systems double check your work for errors, but once the correct information is input into a program, within seconds a variety of reports can be run and displayed for review. Rather than manually calculating this information yourself, you can trust the artificial intelligence to do it for you quickly and accurately. Efficiency will also be improved as any needed information is all located in one central place. This makes searching, locating, and updating data much quicker than having manual files.
  4. Security: By using cloud based programs and software, you can ensure you are securing your information and files in the safest way possible. You may be concerned that people may be able to hack your information, however it would be much harder to hack into an encrypted server to access your information than it would be to break in and steal your physical files. This is because cloud storage uses encryption when transferring data. An encryption essentially makes the data unaccessible to any party not privy to the information. 

With technology advancing at a dramatic rate, it is important to take advantage of the changes offered to you. Not only will digital accounting keep you relevant in a busy industry, but it will also save you time, money, and inaccuracies. The question really isn’t why use digital accounting, but rather why wouldn’t you?

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