Use accounting programs to predict successes
September 24, 2012
There are a bevy of reasons as to why a small business owner would incorporate accounting programs into his or her business plan. The software can save valuable time and money that would otherwise be wasted on copying and pasting numbers into a spreadsheet or manually writing them down in a ledger. Moreover, the program can help ensure regulations are being followed, particularly come tax time, when businesses could face an audit.
However, because the fourth quarter of 2012 is rapidly approaching, many leaders are leveraging the technology to predict the taxes they will have to pay in April. A number of these administrators have found that using the software helps accurately predict sales quotes for the remainder of the year.
Software for taxes
According to Fox Business, owners of smaller companies who use accounting software in their everyday business operations have been adopting the programs to see exactly what they need to produce and sell to break even by the end of the final quarter. As such, if working toward this goal, leaders can predict the taxes they will have to pay and begin setting aside capital for that purpose.
By entering in some figures, like the sales price of products, direct labor and production costs, as well as packaging and overhead, the source explained the programs will tabulate the current sales results. They can also show how many items are needed to break even or turn a profit. While this can also be estimated by hand, doing so with a software tool can save a lot of time.
Predicting in this way can also allow owners to play with the numbers - they can see what the result and subsequent taxes would come out to be if they invested in higher quality packaging or charged shoppers a little more per item.
Used for business plans as well
Rather than just using the predictive qualities of software during tax season, small company owners can learn the ins and outs of the products from the beginning of the company's life cycle. When creating a business plan to present to initial investors, they will want to have an idea of the strategy in place to turn revenue from red to black, which can be easily predicted and organized in a computer program.
Moreover, according to Inc. Magazine, software not only forecasts sales but can provide a history of predictions made, as well as share expectations with customer relations tools. The source claims this can be much more helpful than traditional spreadsheets.