How Your Smart Phone Can Cut Your Accounting Costs

How Your Smart Phone Can Cut Your Accounting Costs

Small business owners: Do you ever wonder why your accounting bills are so high? Ironically, it has nothing to do with the cost of the service.

Accounting fees are expensive because accountants spend countless hours chasing small business owners to find out the business purpose of transactions. It’s their job to keep their clients’ records accurate and their efforts compliant with the IRS. And they simply cannot chase down this information cheaply.

Of course, some small companies try to keep those costs down by hiring bookkeepers. But even bookkeepers aren’t cheap. In 2016, U.S. businesses spent more than $200 billion to employ 5,000,000 bookkeepers, with the average small business bookkeeper costing more than $20 an hour.

How to Cut Your Accounting Costs

Recently I came across a start-up called TALK Accounting that’s solving this problem. They’ve created bookkeeping workflow software for accounting firms and their clients that allows business owners to track and categorize business expenses and the supporting receipts by using the talk, text and photo features of their smart phones.

I got a chance to play with the software, and it’s pretty awesome. I’ve got three different side small businesses — my consulting work and two property rental companies, each holding a short term vacation rental condo. For me, making sure I accurately categorize expenses to the right company, and the right client, is crucial. Before I tried TALK Accounting, I could not find anything that worked right off my smart phone in an intuitive fashion. But even I, a confirmed luddite, can answer a question like “Was that purchase of towels at Target a business expense for your beach condo?”

As much as I like the product, I cannot benefit in the way that many small business owners can. I don’t employ a bookkeeper so I cannot use the service to dramatically cut my bookkeeping costs. With TALK Accounting you can pay $97 per month for software that replaces 90 percent of your bookkeeping tasks. For a small business owner spending $20 an hour for a contract bookkeeper, that’s an expense of $97 a month in place of a more than $1000 one.

Then there’s the reduction in errors. Bookkeepers are human, and make mistakes with tasks like categorizing expenses. By using software instead of people, TALK Accounting reduces the number of errors that business owners make in recording expenses. To me, eliminating the stress of your accountant discovering that you miscategorized an expense and are in trouble with the IRS might be worth the cost of the software.

For most small businesses, record keeping is a cost, not a source of revenue. Anything that drives down the cost of record keeping will improve the bottom line of the business. By shifting to paperless accounting, reducing bookkeeping errors, voice-activating data entry, and automatically capturing credit card transactions in real time, TALK Accounting is driving down the cost of bookkeeping.

The company is soon to launch a partnership with Fujitsu’s Scansnap cloud, so that a business owner can simply drop documents on a scanner, click scan and know that their expense records have automatically gone into their back-end document management system online.

Maybe I am too much of a new company nerd. But I really love it when start-ups introduce products that wring costs out of operating a small business.

Disrupting bookkeeping! Now, that’s entrepreneurship for you.

Using Smartphone Photo via Shutterstock

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Scott Shane Scott Shane is A. Malachi Mixon III, Professor of Entrepreneurial Studies at Case Western Reserve University. He is the author of nine books, including Fool's Gold: The Truth Behind Angel Investing in America ; Illusions of Entrepreneurship: and The Costly Myths that Entrepreneurs, Investors, and Policy Makers Live By.