9 Advantages & Benefits Of Accounting Software For Startups

If you’re like most business owners, you might have initially used a spreadsheet to track your finances. That’s a good tactic to start, but as your business grows, it will almost certainly become a challenge to stay on top of all your transactions with this kind of manual accounting system. 

That’s where accounting software comes in. With the advent of artificial intelligence, accounting software development has accelerated significantly.

Modern solutions are capable of much more than recording and categorizing financial transactions; many products can also help you with bill payment, customer invoicing, payroll management, and customized report generation directly from the accounting platform. 

There are a few different types of accounting software available to businesses. 

Some large companies use customized accounting software or enterprise resource planning (ERP) software, while small businesses and startups may use off-the-shelf solutions such as Quickbooks, Wave, or Xero. Some companies use expert services like Zeni to keep their financial processes running smoothly.

For some startups, the cost of accounting software packages and the technical know-how required to set it up can be daunting. But remember, accounting software is not just for accounting professionals. 

In our experience, the advantages of an accounting software solution far outweigh the difficulties of getting started. So whenever someone asks us, “What are the benefits of accounting software?” we have the following answers at the ready.

9 advantages of accounting software over spreadsheets

1. It saves time.

Like any new software system, there is an investment of time upfront to set up your accounting software.

Still, once you do, it will save you hours of work each week by handling time-consuming manual bookkeeping and accounting processes work hours each week by automatically handling time-consuming manual bookkeeping and accounting processes.

For example, you won’t need to download CSV files from your credit card or bank accounts and manually enter data on your spreadsheet to review your transactions.

Accounting automation can pull all the data for you, and such significant time savings ultimately translates into cost savings.

2. It instantly generates key financial reports.

No more waiting while your administrative assistant puts together your monthly reports: Accounting software platforms have built-in reports that are automatically updated.

With the click of a button, you can download your P&L Statement (or Income Statement), Balance Sheet, and Cash Flow Statement, showing key insights like income and expenses for the month, quarter, or year.

If you have more specific reporting needs, you can usually customize reports by filtering the data or adding extra detail and save these reports to run again in the future. 

3. It syncs all your financial data. 

If your data is stored across multiple platforms—bank accounts, credit card accounts, and payroll services—it can take hours of going back and forth between the platforms to collect the details you need. 

Cloud accounting software will safely sync the data from all your accounting tools via API. You won’t need to worry about data security when transferring sensitive financial information or spend time on data entry to put together a complete financial record.

4. It promotes data accuracy. 

With a completely computerized accounting system, you don’t have to manually update multiple cells in multiple sheets if you make a change to your records. 

Instead, your financial statements and reports will be automatically updated to reflect any changes you make, helping you keep your accounting data free of errors. (Not convinced data accuracy is a major concern? Here’s why it matters.)

5. It produces professional-looking financial statements. 

Once you start getting external requests for financial statements, it’s important to present documents that look professional rather than DIY. 

Particularly when you’re dealing with potential investors, every financial statement you share needs to be accurate, properly formatted, and delivered on time. 

If they aren’t, they give a negative impression of the state of your finances and you could lose out on deals. Think of it like sending an unprofessional invoice to a customer.

Accounting software produces financial statements in accordance with accounting standards that are ready to download and share when requests arise.

6. It simplifies payroll.

While you’ll likely need a specialized payroll system at some point, many small businesses use their accounting solution to handle their payroll while their business is still growing. 

With the right accounting software, you can automate payments to employees, calculate healthcare and insurance contributions, and get accurate payroll tax information. 

7. It gives detailed insights.

If your chart of accounts is set up properly, you can use accounting software to track your transactions by departments, projects, locations, or classes, organizing your financial management. 

This gives you a clear picture of what your income is attributable to and your areas of expense, helping you generate more specific reports and make cost saving strategic decisions. 

8. It streamlines tax filing.

Having standardized financial statements and accurate, categorized data makes it easier for your tax accountant to file your return, create an audit trail, and calculate available tax credits. 

Some programs also have specific reports built in for regulatory compliance and the tax accounting process, such as for sales and payroll tax filings.

9. It reduces inventory errors.

Some accounting software platforms include basic inventory management tools that automatically update to show the number of each product you have on hand, what’s been sold, and when you need to restock. 

Accounting software is an easy way to get accurate, real-time information on your stock levels instead of relying on error-prone manual data entry.

Unlock the full potential of accounting software with Zeni

Zeni is a full-service finance firm that takes care of all your startup’s bookkeeping, accounting, and CFO needs. When you work with Zeni, you get 100% accurate AI-powered bookkeeping software, 24/7 customer support from a finance concierge, and instant access to real-time financial data in the Zeni Dashboard.

To help you maximize the numerous benefits of accounting software, Zeni’s team of finance experts manages your accounting system in the best way to facilitate your startup’s financial operation, from categorizing transactions with departments and classes to setting up your chart of accounts. 

We’re on hand to set up the sync between your accounting software and other finance tools, and to make recommendations on how your accounting software can empower your business as it grows.