A question I get asked a lot is when is the time to invest in accounting software?

In this day in age, there’s not really an excuse for a business owner not to have a system in place because there’s a lot of affordable options, from free to fancier paid options. I am a firm believer in when you’re starting a business, cash flow is limited and so any time you want to spend money it’s important to make sure that you’re getting a return on investment, right?

Either the money you’re spending is going to help you grow, get more sales, or streamline your processes. This is the theory I like to apply to the question in answer.  When you’re running a business you need to keep business records to track your income and track your expenses. How else will you know how much profit you’ve made without a system in place?

How else will you know what you’ve spent money on to grow your business? How else will you know if you’re charging enough for your products and services? These are all answers that can easily be obtained if you have accounting software that allows you to run reports to see the inflows and outflows of cash in your business. So first I want to talk about a free option.

There’s one called Wave. Wave is a great software if you’re just starting out and don’t really have the money to invest in a more robust paid option. It will connect to your bank feeds and does a lot of the same things as the paid options except for once you get to the point that you need to register for GST in Australia, it won’t be able to help you. This is because it’s an American program, and GST is an Australian thing. But eventually, as your business grows you’re going to get to the point where you’re going to have to register for GST and you’re going to hit that $75,000 in sales threshold. At this point, it’s definitely worth considering spending the monthly subscription fee in order to get on a paid software program. There’s a lot of choices out there. The one I am the biggest fan of is Xero. I am a Xero advisor and Balance Tax Accountants is a silver status partner; what this means is that we do a lot with Xero!

Xero is great because it keeps your business finances organized and it gives you the ability over time to run reports to track the status of your business so you can actually see trends. You know the question, “How’s business?” and the default yet truthful answer of “it’s busy”. How great would it be if instead of the run of the mill reply, you can actually say, “hey, you know what? Last month I have had my best month in sales”, or, “I’ve cut my overhead expenses by 10%”. Isn’t that amazing?

That means I’m making more profit by putting in the same amount of effort into my business. It’s invaluable when it comes to growing your small business. It’s imperative that you keep on top of your number, and a cloud accounting software can help you do just that.

Another great feature that Xero has is it can connect to apps. There’s a huge movement in the cloud accounting space to connect to apps that are industry specific.

Some apps that Xero supports are Stripe, PayPal, Receipt Bank, Spotlight Reporting, Workflow Max, Harvest, and a lot more.