In Pursuit of Profit
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 As business technology continues to get more sophisticated, business owners may wonder if an accounting software can simplify their staffing needs while still providing high-quality bookkeeping and financial reporting. Accounting software companies would have you believe that managing your books is as simple as generating customer invoices, adding receipts for your expenses, and linking your bank accounts. And while software can certainly streamline these day-to-day operational activities, the question still remains, are these types of platforms a true substitute for your in-house or outsourced accountant role?
So, can you replace your accountant with some shiny sleek software?  Small businesses with less than $25M in annual revenue can choose whether they prefer to use cash or accrual accounting. However, you must declare which you are using when filing business tax documents during formation and plan to stick with your choice for the foreseeable future. New businesses are often tripped up by which they should use because they do not truly understand the implications of each type of accounting.
They ask: What are the differences? Are there advantages to using one over the other? Do bookkeepers and accountants work with both? The decision about which type of accounting system to use depends on size, payment terms, business goals, available resources, and third-party financial requirements. Management should consider all these factors before deciding and consult with a professional accountant as needed during the process. Both cash and accrual accounting methods result in the same bottom line when all your accounts receivables are collected. The differences are when that revenue is recognized and what kind of tax obligation is incurred as a result.
 Accounting is a necessary evil for most business owners – they understand that optimal cash flow requires accurate accounting, but they are often unsure of their own abilities when it comes to keeping their books. Even business owners that outsource their bookkeeping and accounting functions still need to understand accounting principles and practices to oversee the work that is being done on their behalf.
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12/21/2020