According to Research and Markets, the global accounting services industry was worth around $588 billion in 2021, and the US makes up a significant portion of this market.
The US accounting services industry was valued at $144.5 billion this year, but this doesn’t take into consideration new trends such as web apps and online services.
Regardless of how small or big a business is, they all require financial records to be handled correctly, and there can be huge repercussions for anyone failing to manage accounts and pay taxes as necessary.
Scandals such as Enron and WorldCom led to increased due diligence, and more careful auditing to avoid similar accounting errors.
For small businesses though, while essential, accounting tasks can be managed more easily, and today online services are assisting with invoicing tax demands, and other financial matters.
What Are Online Accounting Services?
Online accounting platforms and services are an alternative option to outsourcing or hiring an accounting department internally.
Depending on the size of a business, they may have a department that takes care of all accounting aspects from payroll to billing clients.
Smaller businesses may opt to use an external accounting service alongside just one or in-house members of staff.
However, through the use of the internet, there are online accounting services that can be made use of.
Services such as Akounto allow small businesses to keep track of all their financial transactions, link accounts, and see real-time data through the use of the cloud.
What Functions Can You Expect To See In An Accounting Platform?
Some accounting platforms will let businesses link POS systems for instance so that sales transactions are tracked, along with tax and other data.
Being able to collate financial information this way allows small businesses to make data-driven decisions very quickly.
Accounting platforms these days are likely to be cloud-based, and they help small businesses with bookkeeping and preparing records for tax payments.
You could expect an online accounting service to deal with the following areas, and more:
- Syncing of bank accounts
- Credit card records
- Accounts payable
- Accounts receivable
- Profit tracking
Tracking cash flow, and profits, and offering a payment collection point for customers, are essential areas for cloud-based accounting software.
And having a clear picture of the accounts receivable and payable will help you understand how your business is operating.
You can’t effectively price your products, or build marketing strategies without having a full view of your financial performance.
A good online accounting service will let you and your finance department view accurate real-time data, and this is vital for making informed business decisions.
At a minimum, you would expect your accounting service to assist with bookkeeping, preparing basic financial statements such as balance sheets, and reporting on profit and loss.
Access should be available for anyone you authorize, such as financial advisors or accountants.
Who Needs Online Accounting?
All businesses can use online or offline accounting software. Oracle, SAP, and Sage, all have products aimed at large corporations and enterprises, while there are several cloud services designed for SMEs.
Three types of business operators that would benefit from online accounting would be start-ups, small firms, and freelancers.
The latter could find automated accounting software extremely beneficial due to the demands on their time.
Freelancers need to work hard at generating leads, and actually be productive to generate an income.
They may not have the time to keep track of their financial transactions as well as they should, and they may not be totally competent with tax issues.
Online businesses that trade internationally can benefit from accounting software too.
Tax laws and compliance regulations differ from region to region and country to country. A quality accounting service could help you to remain compliant.
Why Do Small Businesses Need Online Accounting?
Small businesses and freelancers could use cloud services for accounting to save time and reduce costs.
Instead of paying an accounting firm or employing full-time staff, software can be used instead.
Accounting software should simplify all the tasks associated with finance by automating billing and invoicing, tracking sales and expenses, and monitoring profit and loss.
A payment portal can be linked to some accounting software to allow customers to pay online, and improve cash flow.
Reporting allows small business owners to see instantly what their tax responsibilities are, their debts and payments due, and where clients are overdue on their invoices.
Without being able to see your current finances in real-time it will be harder to make accurate business decisions, and boost profitability.
What Are The Benefits Of Using Online Accounting Services?
Many of the main benefits have already been covered, but accounting software helps to keep thorough records of documents.
One of the better tips for keeping financial records is to have a digital platform for storage.
This helps with auditing, ensures you don’t miss tax deadlines, and can help to be statutory compliant. And it can also safeguard against fraud and embezzlement.
What Happens If Accurate Accounting Is Ignored?
It is unlikely that ignoring your accounting will result in anything like the Enron scandal of 2001.
Back then it was discovered that years of false accounting had inflated the company’s value by around $1 billion.
However, if you ignore proper accounting, and fail to keep accurate records you can open your business up to numerous problems and fines.
Giving false tax returns to the IRS for example can lead to several penalties and fines, and in the worst situations, result in jail time.
Online accounting services can make tax returns easier, and your business can benefit in other ways too.
Your business’s reputation could suffer if you end up in the news regarding financial irregularities, and you could also lose money through embezzlement. So, proper financial records are necessary rather than optional.
If you don’t have a clear picture of your finances, then it will be easier for theft and fraud to occur.
Alarmingly, around 30 percent of businesses failing do so due to employee theft according to the Better Business Bureau.
Are Online Accounting Services Safe?
Cloud-based accounting systems will only be accessible by authorized employees, and third-party associates such as tax advisors. Therefore, the options for fraudulent activity are lessened.
Keeping detailed accounts, and being able to view all transactions in real-time, means that theft, fraud, or embezzlement will be that much harder to carry out. And you can keep cash flowing through automated payment reminders and invoicing.
Cloud-based services are generally considered more secure than small business networks, and vendors will carry out automated backups, and have disaster recovery plans in operation.
The facilities where servers are held are usually only accessible by a small number of authorized personnel too, so the chances of vandalism or physical theft are reduced.
Using an accounting platform should not only keep your business safer but assist with cash flow and liquidity which will ensure your financial security too.
Over 90 percent of businesses are using some form of cloud service now, with storage being a highly popular choice for securing data off-site.
Accounting is another common use of the cloud, and using dedicated software can be highly beneficial to small businesses.
Errors are far less likely to be made, time will be saved, financial transactions will be more transparent, and there is less chance of tax responsibilities being forgotten or poorly handled.
All of which will help your company remain compliant, liquid, and operating profitably.
Cloud-based accounting software might even help your business to evolve by making data-driven decisions and introducing marketing strategies based on your financial reports.