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Automated Vs. Manual Accounting: Which Method is Best For Your Micro-business

In micro-business, accounting is perhaps the biggest element that helps steer the business to profitability in the long-term. The application of the right models of accounting within your micro-business gives you an opportunity to evaluate every transaction with a view to understanding the dynamics of your business. Whereas technology has led to the development of advanced accounting software systems, the old manual system of accounting that is book-based is still in use. Both approaches to accounting in your business, if accurately used, can serve the purpose. However, there are certain benefits that automated accounting has over manual accounting in reference to your micro-business.

Time Consumption

Time is an important entity when seeking to successfully manage a new business. Both the manual and electronic accounting systems can be time-consuming. However, the extent and amount of time invested in facilitating completion of accounting and bookkeeping practices within your micro business vary significantly. In the manual bookkeeping process, you have to sit down at the close of every day’s business to record down every transaction that you have engaged in. This process can be quite demanding, especially since you have to refer to as many receipts as you have issued or received in the day. The process even becomes more demanding as you have to correctly record every transaction in the right category in your ledger book.

Comparatively, the automated electronic system is considerably much faster to work with as it only requires you to click a button to harmonize the day’s transactions with the appropriate records in your electronic ledger book. If, for example, your business utilizes a point-of-sale system, then you would have an opportunity to quickly record and transfer details of every transaction at the click of a button. However, it requires much initial time to set up the accounting system such that every transaction recorded is matched with the right corresponding column on the electronic ledger book. You can learn more on how to accurately do an initial set up your Quickbooks accounting system for optimized functionality.

Regarding time consumption, therefore, the electronic automated ledger system is much faster than the manual accounting system.

Accuracy In Computing

The process of bookkeeping in your micro-business requires compilation of huge volumes of day-to-day transactions. In addition to the compilation and transfer of records, appropriate computations must be done to generate the right figures that denote how healthy your business is doing. The manual accounting system is quite demanding when it comes to calculations as every transaction is processed manually and the necessary derivative figures computed using an appropriate formula. In the course of conducting such computations using the manual accounting system, the prospects of committing serious errors are significantly high. In most cases, errors may be committed by the omission of certain digits which implies that every other parameter derived from the erroneous digits would lead to misleading figures.

On the other hand, the automated accounting system in your micro-business is relatively more accurate as the computations are done at the click of a button. The prospects of making computational errors using the automated accounting system are therefore significantly minimized, if not eliminated. The automated accounting system accomplishes such high levels of accuracy by having the formula embedded within the software in a way that they cannot be altered.

Automated accounting is, therefore, the preferred option for your micro-business as far as maintaining data integrity and accuracy in computing is concerned.

Cost Of Adjusting Entries and Correcting Errors

In the course of performing accounting tasks for your micro-business, adjustments and error corrections are bound to occur in any stage of the process. When using the manual accounting process, the prospects of tracing an error and making the necessary adjustments to ensure the error is corrected can be quite costly and even require you to start afresh the whole accounting process. Cancelling out digits within your ledger book would render the accounting work untidy and illegible. Your capacity to trace possible errors for adjustment is also tremendously minimized when operating under the manual bookkeeping process.

On the other hand, when using the automated accounting system, the prospects of detecting and correcting errors are greatly enhanced. Depending on the automated accounting system that you are using, you can be able to test the integrity of your data, thereby helping establish potential errors. Also, making the necessary corrections is greatly enhanced and facilitated when using the electronic automated accounting system as you can edit the data by backspacing where necessary. Besides, the automated accounting system’s process of error correction automatically adjusts every other derivative figure within the entire accounting data.

Therefore, on the basis of ease of adjustment of entries and correction of errors within your data, the automated accounting process and system is much better and advantageous as compared to the manual accounting process.

Data Access and Security

In business, data and information protection is an important entity that should be emphasized in every step of the way. When thinking about data security and access, the manual accounting system requires you to secure your data by locking all accounting ledger books in safes and drawers. Such methods of data protection are often inefficient in fighting off primitive threats of data security such as burglary.

On the other hand, automated accounting options give you an improved security framework whereby you get a chance to protect your data with both physical and electronic mechanisms. The data stored in your accounting software can be locked with a combination of electronic data protection measures such as passwords and biometrics. Protection can be further enhanced by storing the data on cloud storage mediums where the prospects of theft of physical hard disks used to store electronic data are eliminated.

In general, when it comes to securing your business data, the automated and electronic accounting system is much better as it helps secure your business data from all possible threats to data safety.

In conclusion, whereas both manual and automated accounting systems are of much benefit to your business, comparative evaluation of these systems reveals that the automated and electronic accounting system is much reliable. In all aspects of comparison, electronic accounting systems give you an opportunity to understand the flow of your business. The key features of automated accounting protect the integrity of your business data while ensuring accuracy as far as transactions and computation are concerned.


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The Phat Startup was created by Mike McOwen to create a space where entrepreneur lifestyle could be focused on. We tend to live a different lifestyle than most. Entrepreneurs tend to be interested in maximizing their life, not only their profit.

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