It doesn’t matter if you need to keep track of cash flow or reconcile your bank accounts. Or manage data entry and keep your accounting software current. Keeping accurate financial records for your company is time-consuming.
Many software, web-based tools, and services have been developed in recent years to automate some or all of this bookkeeping work.
We’ll show you what to look out for in an automated accounting solution, and how to ensure it’s right to your business.
What does it mean to “automated bookkeeping”?
It is unlikely that your company has many employees or millions of dollars in annual revenue.
You could use the DIY route if you are just starting out, and have few expenses to track. Or, you could use our Excel Income Statement template – but these solutions can be susceptible to human error.
Automated bookkeeping solutions or services are somewhere in between these extremes. They use a combination of software tools and human-powered bookkeeping services to automate most of the manual work involved with bookkeeping.
These solutions not only compile all of your business transactions and eliminate a lot of manual data entry but also provide simple software tools that allow you to create financial statements, track expenses and make tax time easy.
What features should an automated system for bookkeeping have?
Depending on the type of accounting system your company uses, cash-basis and accrual, which system you choose to use for automated bookkeeping will determine what type of bookkeeping software you need and how much you are willing to pay.
However, the majority of automated bookkeeping software will accomplish the following:
1. Transaction categorization and expense management
The majority of modern expense tracking software is in the “automated bookkeeping” category, and it works quite well.
Simply enter your banking information and the software will scan your bank statements and credit card statements, and then upload them into an expense tracking system.
Proper categorizing transactions and recording them will help you catch more deductions. This will make it easier to get your taxes paid if you are ever audited by IRS. It also makes it much easier to look through your financial records.
Mint and Quickbooks Online are two of the first apps to offer this functionality. However, Expensify and Bench have become popular among small- and medium-sized business owners who want a low-cost solution for bookkeeping.
2. Generate financial statements
Bookkeeping is not just about expense tracking. You should have financial statements generated by any bookkeeping software or automation software you use, such as income statements and balance sheets.
Automated bookkeeping services, unlike expense tracking tools, are designed for accounting and full-blown bookkeeping. You may need to consult an accountant if you are considering DIY accounting software.
3. Give you tax-ready financials
Did you know that you are required by the IRS to keep receipts and records for all expenses claimed on your taxes for at least three years from the date you file the return?
- It is a great way to keep this rule in mind and save time while doing your bookkeeping. Another advantage of automating your bookkeeping is digitizing all transaction records.
- Bookkeeping and accounting software can dramatically reduce the time it takes to get your tax ready for business.
- Automated categorizing and flagging of possible deductions
- All tax records can be kept in one location
- Reduced time spent searching for receipts, invoices, and other tax-time records
Automated bookkeeping has many benefits
Small businesses that are strapped for cash and time can automate their bookkeeping processes. Here are some benefits:
1. Reduce the risk of human error
Moving a lot of data from one location to another is necessary for recording, categorizing, and reconciling transactions. You can make a mistake no matter how careful you are. This is why automated bookkeeping solutions are so appealing.
Automating your bookkeeping can add an extra layer of certainty to your bookkeeping process. It reduces human error and leaves you with more reliable financial data, giving you greater peace of mind.
2. Get real-time insight into your finances
Automated bookkeeping not only is more reliable, but it’s also quicker. Automated solutions allow you to see the current state of your finances in real-time, rather than waiting until the end of each month. This allows you to make more informed business decisions and can help you make better business decisions.
3. Reduce the time spent on repetitive tasks
Automating repetitive tasks is about software that lets you have more time to run your business. Automated bookkeeping is no exception.
You probably have a time block in your calendar if you did your bookkeeping manually.
Automated bookkeeping allows you to spend less time pasting numbers into spreadsheets. This gives you more time for higher-value tasks such as creating financial statements, gauging your business’ health, and making strategic business decisions that will impact your long-term success.
How a Bench can help
Bench provides an online bookkeeping automation service for small business owners that caters to those who may be having difficulty catching up with important bookkeeping tasks.
The bench can import your bank statements, compile all of your business transactions, and also provide monthly bookkeeping services using proprietary software and human bookkeepers. This includes finding all tax deductions that you are eligible for and making sure you don’t pay too many quarterly taxes.
The bench can also produce monthly financial statements and provide a Year End Financial package of tax-ready financials for you to help make your tax filing quick and simple. The bench can even file taxes for you!
Start your Free Trial of Bench today if you are curious about automated bookkeeping for your company.
The bottom line
For entrepreneurs who have limited time or are looking to reduce the repetitive work involved in maintaining books, automated bookkeeping can be a great solution.
Automated bookkeeping solutions should streamline your bookkeeping process without you having to spend weeks learning new software. Automated bookkeeping is a great way to reduce human error, provide real-time information about your company’s financial situation, and allow you to spend more time on high-value activities. This will help your business be stronger in the long term.
Read More: Virtual Bookkeeping
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