What is a small business?
Let’s break down the concept of a small business before proceeding. Small businesses are the bedrock of the Canadian economy and range in size, revenue, and industry. When most of us think of small businesses, we think of the café down the street, or the mechanic shop we take our cars into. However, small business covers a much wider array of industries than what we typically think—many of which are complex, high-revenue generating small enterprises. In Canada, the official designation of a small business is: a goods producer with fewer than 100 employees or a services provider with fewer than 50 employees. For businesses that exist in the gray area between small and large, the term SME (Small & Medium Sized Enterprises) exists. This is for businesses with fewer than 500 employees. A good rule of thumb is if your business generates less than $5 million in annual sales, you are considered to be a small business.
What is an accounting software?
Accounting software is a computer program that helps bookkeepers and accountants record and report a business’ financial transaction. These software programs make record keeping and reporting seamless, simple, and efficient. Unlike large firms, small businesses don’t usually have the luxury of using custom accounting software options. However, for small firms, low-scale customization at a fair price is possible. More on this below.
One of the major benefits of accounting software for any business, regardless of size, is the ability to store large amounts of data without taking up physical space. For small businesses, this provides amazing benefits due to the low costs associated with online versus physical storage. Additionally, this data can be backed up and stored on cold (offline) storage systems or in the cloud.
How does accounting software help small businesses?
Plain and simple, accounting software allows small businesses to keep mass amounts of data and record an infinite number of debits and credits for a fraction of the cost of alternatives (hiring an accountant and/or bookkeeper). For businesses, these software options also offer a scalable opportunity to track revenue and expenses. Most software options will support a business’s growth, up to a certain point at least. A time exists when software is no longer able to support the needs of a growing business. For information about the best accounting options for growing SMEs, click here.