Small Business Week Guide to Accounting and Finance #DreamSmallBiz

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One of the hardest things about being in business is staying current. Technology changes at an incredible pace.

Our Small Business Week Guides will help you catch up with trends and get actionable advice for the coming year.

Few things are going to change as quickly for small businesses in the coming year as accounting and finance. With accounting quickly migrating to the cloud and accounting software being infused with artificial intelligence (AI), small businesses will soon be able to get intelligent advice, not just reports, from accounting software.

The integration of cloud-based accounting with crowd-sourced lending means better matching between a firm’s sources of capital and uses. This should make more capital available to small businesses when they need it at a lower cost.

“FinTech” is the buzzword for this new breed of technology that is disrupting everything you thought you knew about credit card processing, merchant accounts, bookkeeping, applying for loans, factoring receivables, financing purchases, business lines of credit, and money management.

This Small Business Week Guide to Accounting and Finance will whisk you through the changes, introduce you to the dominant names in this space, and provide actionable tips for applying new technology to improve your business.

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Cloud-based accounting programs just keep getting better. The coming year will see some disruptors going after the dominant vendor, QuickBooksOnline (QBO). QBO has pioneered cloud-based accounting for small businesses. Every day, QBO adds improvements to their offerings, turning this glorified spreadsheet into a small business essential.

QBO started with accounting, then integrated payroll, then taxes, then banking, and the list keeps growing. They have become an easy source for Workers Compensation insurance, Business Owner insurance, and other important services. Don’t be surprised if they start selling office supply subscriptions soon.

“Smaller businesses that work with an accountant who utilizes cloud-based solutions are more likely to have a better understanding of the numbers behind their company,” says Chandra Bhansali, co-founder and CEO of AccountantsWorld, who was named one of the 100 most influential people in accounting.

These two online accounting suites are worth considering:

  • QuickBooksOnline has some new challengers, though, who are taking aim at Intuit’s empire of cloud-based accounting. ZipBooks is a free cloud-based accounting program that integrates cash advances with invoicing. Small business owners can give themselves a cash advance on outstanding invoices. “With a single tap on an iPhone,” says Tim Chaves, ZipBooks founder and CEO, “ZipBooks users can smooth out cash flow and get back to running their business.”
  • Xero is another online accounting suite that is getting rave reviews for its dashboards, including “Dynamic Cash Flow Monitoring”, which alerts you to deposits received within seconds and projects cash bottlenecks that might need to be financed.

In the coming year, be sure to take a look at the features available in your current accounting solution because those features are likely to muscle up this year. You may want to scale back on bookkeeping services and shift your accounting spending to more strategic issues and better software.

Look for more integrations in the coming year. Accounting suites will increasingly offer a variety of financing soluions tied to the information they are collecting about your business. Look for services such as legal assistance, tax advice, and banking options coming out of your accounting software.

Related Article: Which is Better: Cash Or Accrual Based Business Accounting?


When credit card giant, CapitalOne, entered the banking market in 2005, the capabilities of online banking began a radical transformation. In the earliest days, all you could do was see your bank balance. Then came bill pay, direct deposit, fax deposit, connect line of credit, connect to credit cards, connect other accounts, etc.

Today, small-business banks are trying to get a piece of the action in merchant accounts, credit card processing, online accounting, payroll processing, accounts receivable lending, cash flow loans, you name it. As the banks continue consolidating into national and international giants, the enter ever-larger markets including insurance and investing.

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Small business owners are in the driver’s seat as these banks compete for all their business. Bundled service packages will get sweeter. Optional services will get more numerous and tailored. Expect giants like CapitalOne, Wells Fargo, CHASE and the rest to aggressively try to wrestle your business away from QuickBooks, Square, and your local bank.

Here are a few factors to consider when reviewing your banking options in the coming year:

  • Free accounts are back.¬†After a few years making small business owners pay a monthly charge for a checking account, many banks are returning to the old ways of providing a free account and making up the cost in other services and fees. If you aren’t getting free checking it’s time to review your banking options.
  • Merchant account rates for credit card processing should be competitive. Thanks to Square and similar inexpensive, no-contract processors, the banks have gotten a little sharper with their own offers. Merchant accounts are notorious for hiding add-on fees for audits or equipment. Be sure to compare total cost of operation before switching.
  • Integration with your accounting program is essential these days. Small businesses should insist that their bank cooperate with their cloud accounting provider. Importing data manually from your bank to your accounting program is a 20th century way of working. Your bank may be offering a better deal on cloud accounting services than QuickBooksOnline, ZipBooks or other providers.
  • Integration with payroll is important for a small business. It usually means integration with online tax payments and tax filing. When these services are connected, quarterly closings take minutes, not weeks. For small businesses with employees in multiple states, the peace of mind that comes from automated payroll and taxes is worth as much as the savings.
  • Better rates should be a by-product of the competitive pressure on banks from non-traditional lenders. Gone are the days when your bank could count on handling your financing needs just because they have your bank accounts. Today, you can have dozens of banks competing for your business based on just your credit score. Small business owners should look at the terms of their financing every year. New types of lenders, hungry for new business, are offering great deals that will disappear once your local bank starts offering the same deals.

Related Article: Inside Equity Crowdfunding: The Quire Difference

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According to the Federal Reserve Bank of New York, up to 72 percent of small businesses get turned down for bank loans. After the banking crisis of 2007-08, credit requirements for small businesses tightened, and new capital requirements for banks are making things worse.

On the positive side, the relentless advance of financial technology, or FinTech, has resulted in vastly more efficient ways of matching financing to needs. Do you need funds for a specific project? Consider crowdsourcing those funds through a Kickstarter campaign.

Is your business too new to qualify for a bank loan? The Lending Club, a peer-to-peer network, could provide the financing you need at a lot less than the credit card rates you’re currently paying.

Surprisingly, a recent Lending Tree survey found that 58 percent of small-business owners did not shop around when searching for small-business loans online. Wow, that’s terrible. You would shop a mortgage around, or an auto loan, but many small business owners just accept what their bank offers. That’s an expensive mistake.

Fox News recommends that small business owner use “platforms like Nav [to] make all aspects of business financing easier. You can shop and compare a variety of traditional SMB lenders and compare rates, processes and more from a simple dashboard.” Here are a few other suggestions for your Small Business Week financial tune-up:

  • Do not apply to more than three lenders. Too many applications signal to lenders that you might be more trouble than your business is worth. Try to narrow your options to a couple online lenders, such as Quicken Loans, and then give your bank a shot at matching the best rate.
  • Consider crowdfunding for capital investments. If your project has a good story, you can navigate around traditional capital markets and the related paperwork using Kickstarter, IndieGoGo and other crowdfunding services. It’s not paperwork-free, and you may want to contract with someone experienced in crowdfunding to help guide you through the process.
  • Peer-to-peer lending may sound like you’re getting investments from colleagues, but it’s the investors who are peers, such as alumni from the same college. Your need is communicated to members of the network and they decide whether or not to lend to you and at what rates. Peer-to-peer works well for those businesses less than five years old that may not have the track record to qualify for bank financing. Some peer-to-peer lending networks you may have heard of are Funding Circle and Lending Club. You can find a long list of others at this link.
  • Micro lending refers to small loans made by nonprofit funds at below market rates to worthy causes. It’s not a lot of money, but for many companies it is just what they need at a price they can afford. Some microfinance companies are Grameen America, Opportunity Fund and Accion.

Related Article: Ways to Pay: Credit Card Processing Tools All Small Businesses Should Use

Credit Card Processing

Gone are the days of the “knuckle-buster” credit card impression devices with their carbon paper receipts. Today, credit card processing is morphing into mobile biometric scanning that confirms identity and funds availability at the same time.

If you haven’t been assessing your small business’s credit card processing system every year, you will be surprised to discover that many of the hidden fees are gone, the published fees are down, and the services have multiplied like magic.

Here are some examples:

  • Square changed the payments game by making merchant accounts for small businesses profitable to service. Their rates are not the lowest but they are simple. There are no contracts. A host of competitors are now in the market, including QuickBooksPayments and PayPal.
  • Apple Pay, Samsung Pay and Google Pay are all coming on strong, riding the wave of E-commerce that is moving to the mobile phone. Today, less than 5 percent of E-commerce in the U.S. is on mobile phone. In Asia, the number is more than 50 percent. Paying by phone could become more common than currency in the coming years.

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