Technology has given us the necessary tools to make our lives more convenient than ever before. In business, this covers many areas, including accounting software, which has made it easier for entrepreneurs to manage their business and finances. However, some still believe that no machine or equivalent can replace the work of an extraordinary accountant.
It has been an ongoing debate between the efficiency of a traditional bookkeeper versus accounting software. The modern advancements in technology have made it possible for businesses to manage most of their financial areas themselves. It’s an all-around tool which can maximize your business’ performance. On the other hand, accountants provide more value by offering financial advice when making key business decisions. Nothing beats the personal touch a financial advisor can give.
Accountants and accounting software have their own advantages and disadvantages. To understand these pros and cons, we have prepared a guide to help you make sound business decisions and avoid potential financial pitfalls.
Advantages and disadvantages of hiring a professional accountant
Whether you are a business owner or an individual seeking help in filing taxes, nothing beats hiring a professional accountant. They can handle your financial work and even offer you advice. However, before you hire an accountant, checkout the advantages and disadvantages:
Advantage: personal touch
Professional accountants are like family doctors – you can build a relationship with them. Like doctors, they understand your financial situation and goals. Their advice can help reduce tax on capital gains or prepare for your future. A software program cannot anticipate these things. Nothing beats the human touch.
Disadvantage: it can be costly
Cost is the number one reason people turn to accounting software for help. On average, accountants can charge between $100 and $1,000 for their services. These may include simple tax returns, itemising and forms for declaring capital gains and losses. In addition, professional fees may also include hourly rates and processing fees, depending on your needs. It can definitely put a dent in your wallet.
Advantage: tax fees may be deductible
This is one of the main advantages of hiring a professional accountant. Since filing taxes can be complicated, some fees incurred while filing may be deducted from your tax return. These fees may include the following: – Advice on tax planning, – Legal counsel on tax issues, – Fees incurred during the tax preparation, and – Fees for representation in tax audits and collections. An accountant can guide you on how to avail of these possible tax deductions. They can help you itemize all deductions to claim tax breaks.
Disadvantage: be aware of people posing as “professional accountants”
Before hiring a professional accountant, it is best to investigate their background. Check references and ensure that these are legitimate. You can also ask for feedback from previous clients, colleagues or business partners. Remember that you will be sharing personal and confidential information, which can be used against you. If you are not careful, you might lose more in the end.
Advantages & disadvantages of using accounting software
Accounting helps a business function and grow. The advent of accounting software has made it easier for entrepreneurs to manage and track their finances. It’s a cost-effective way of running a business. However, it also has its advantages and disadvantages. Let’s take a look at some of these examples:
Automation is one of the main advantages. Software removes all the time-consuming manual processes and streamlines everything. Aside from automated calculations and formulas, it can generate reports with a click of a mouse. Accounting software can also share information to other users through email or other electronic means. It makes everything seamless and organized.
Disadvantage: prone to fraud
Since data and information can be shared between users, it is now prone to fraud. Anyone can alter the stored data and use it for fraudulent activities. These can severely affect a business’ operations. To prevent this, extra layers of electronic security must be added to existing ones. In addition, a team of internal auditors may be needed to check for data inaccuracies. More security measures mean more costs.
Using accounting software makes it easier for businesses to share and integrate information. This is also crucial for companies on a merger. Instead of taking months to integrate all the financial and system data, it can be accomplished in less than a month. Compatibility is the key in making a process efficient and seamless.
Disadvantage: additional software & training needed
Accounting software requires constant updates to work properly. Some features, such as exporting data to an Excel spreadsheet or saving it as a PDF file may need to be purchased. You will need these to generate reports and for filing purposes. Purchasing these software add-ons may pose an additional expense to you. With the new software and updates installed, you also need to learn them. Although most modern accounting software is generally user-friendly, it still takes time to master their features. Paid training is the way to go to avoid costly errors in the end.
The bottom line
There is basically no difference between a traditional accountant and an electronic one. If you prefer doing your taxes and financial statements using software, go ahead. If you feel that a trained professional can help manage your finances, give it a spin. Both can help you maximize your business’ potential. As Steve Jobs once said, “technology is nothing.” Have faith in people and give them the tools they need. They will do wonders with it.
Images: ”Graphs, charts, business table. The workplace of business people/ Shutterstock.com“
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