Companies that lack a dedicated accounting staff and don’t use technology put their finances at risk, according to a new survey.
WASHINGTON, DC, October 1, 2018 – One-quarter of small businesses (25%) track their finances on paper instead of a computer, according to a new survey by Clutch, the leading B2B research, ratings, and reviews company.
Manual accounting is more time consuming, more prone to human error, and often faces greater damage from physical disasters, such as fires or floods.
Nearly Half of Small Businesses Lack In-House Accounting Staff
The survey also reveals that 45% of small businesses don't have an accountant or bookkeeper.
“Most small businesses need a combination of a controller, an accounting manager, and a [bookkeeper],” said Rhett Molitor, co-founder of Basis 365 Accounting, a cloud-based accounting service. "Small businesses may not be able to afford that, so we usually see them under-hire."
Experts recommend outsourcing as an affordable solution for small businesses that can’t afford in-house accounting staff.
Small Businesses Combine HR and Accounting Responsibilities, Risking Legal Trouble
At nearly three-quarters of small businesses (72%), one person handles both HR and accounting responsibilities.
It’s often the accountant who ends up taking on HR tasks, say experts. This situation is problematic given that accountants are not typically trained to handle sensitive HR situations, such as discrimination and harassment.
“HR, just like accounting, is a specialized field,” Molitor said. “If you try to wing it, you’re probably going to get burned. In most cases, the law is going to favor the employee.”
QuickBooks Reigns Among Small Businesses That Use Accounting Software
More than half of small businesses (53%) use an accounting software to manage their finances. The most popular option is QuickBooks, used by 74% of small businesses.
Software can ease the complicated task of accounting for small businesses.
Donna Conte, service area leader for accounting services at Warren Averett, a full-service accounting and advisory firm, commented on accounting software’s strengths for small businesses: “It’s not expensive. It offers the benefits of information right at your fingertips, plus security and scalability.”
Jon Fasoli, director of product management at Intuit, the software company behind QuickBooks, says they built QuickBooks with small businesses in mind:
“We built QuickBooks Online from the ground up as an easy-to-use yet powerful platform for small businesses looking to do less back-end manual entry data and instead focus on what matters most – running and growing their business,” Fasoli said.
Overall, the survey suggests that small businesses should carefully evaluate the resources they need to effectively and securely manage their finances.
Clutch surveyed 302 small business owners and managers to learn more about their accounting resources.
For questions about the survey, a comment on the findings, or an introduction to the industry experts included in the report, contact Riley Panko at [email protected].
A B2B research, ratings, and reviews firm in the heart of Washington, DC, Clutch connects small and medium businesses with the best-fit agencies, software, or consultants they need to tackle business challenges together and with confidence. Clutch's methodology compares business service providers and software in a specific market based on verified client reviews, services offered, work quality, and market presence.