Benefits of Good Accounting System for Sole Proprietor

 Every Sole Proprietor needs this article. Proprietors need to have the best of an accounting system. This is why you need a good sole proprietor accounting software with a good sole proprietorship bookkeeping system.  Sole Proprietorship accounting sample and sole proprietorship peculiar accounting entries make the difference. Chek out  Benefits of Good Accounting System for Sole Proprietor in this article.

Benefits of Good Accounting System for Sole Proprietor

Internal Control System & Accounting System:

An accounting system is an element of Organisational Internal Control System. An accounting system is used to manage the income, expenses, and other financial activities of a business. As a matter of fact, we all know that before  advent of  electronic Internal control system which include electronic accounting systems, accounting system was made up-of coherent interrelated manual activities that follow  business-decision making due process.

However, what we’ve now is  accounting system that could be said is about 80% electronics and 20% manual due to human interventions and interactions for these electronic gadgets to work well.  In the light of this, today, you need good accounting software to operate your business well.

Types of accounting software:

I have here some of the accounting systems that are good for small businesses.

1. Spreadsheets. Many small business run their businesses just using an electronic spreadsheet.
2. Enterprise resource planning software (ERP): Webopedia has to say this ” Enterprise Resource Planning (ERP) is business process management software that allows an organization to use a system of integrated applications to manage the business and automate many back office functions related to technology, services and human resources”. This is a workable system that you may use.Custom accounting software. As your business grows and changes, customizable accounting software is critical to success.
3. Intuit QuickBooks: Best Small Business Accounting Software. QuickBooks is an accounting software package developed and marketed by Intuit. QuickBooks products are geared mainly toward small and medium-sized enterprises.
4. Zoho Books: One of Best Accounting Software for Small Businesses. It’s a cloud-based accounting solution suitable for small organizations. It features contact management, invoices, expenses, sales and purchase.
5. FreshBooks: A Best Small Business Invoicing Software. The best cloud based small business accounting software. Send invoices, track time, manage receipts, expenses, and accept credit cards.
6. Wave Financial: Best Free Small Business Accounting Software. It provides financial services and online software for small businesses.

Benefits of Good Accounting System for Sole Proprietor

This topic is good for every business man and woman. It gives you an overview of what you need a good accounting system for. Here are internal and external benefits of this system.

You may notice such  importance in  this topic.  Such benefits are:

(1) Income Statement:  Financial accounting is used to report the outcome of business operations in monetary terms.

Balance Sheet: Financial accounting  determines a company’s financial position for a specific period.
Cash Flow: This defines your business liquidity. It helps you manage cash flow and meet commitment deadlines
Financial Ratios: By statistically analysing your business activities, it helps you evaluate the performance of your business
(2) Management Decisions: You need to make budgets, Business Plans, set goals and articulated benchmarks. This shows how strong the internal control of your business is. You accounting system will yield all the variables and parameters needed by the management.
Do you remember that asset management is part of this management internal control system. Cash, inventories, fixed asset management re important part.
(3) Compliance: You must know that your accounting system must comply with required statutory standard to comply with established regulatory bodies. In Nigeria your accounting system must yield information that conform to Company And Allied Matters Act ( CAMA) requirements. Many organisation fall under various regulatory bodies which require one form of accounting information or the other. Statutory Reports like annual income taxes returns,  CAC Annual returns  and FIRS, Contract bidding compliance certificates from NSITF, ITF etc. re supported by accounting information.
(4) Externalities:  In addition, Investors, Lenders, Banks consider  financial health of  organizations before making commitments. It’s necessary to determine on the basis of which loans re granted, considering the revenue earning capacity and internal control system of the organization.

Benefits of Good Accounting System for Sole Proprietor

There are these accounting firms that can help you install or manage your internal control system or accounting system. Complete Full Marks Consultants Limited can do that for you.

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Ane

Deacon Anekperechi Nworgu, a seasoned economist who transitioned into a chartered accountant, auditor, tax practitioner, and business consultant, brings with him a wealth of industry expertise spanning over 37 years.