Accounting can make anyone's head spin. Between trying to keep track of receipts, invoices, and ledgers, it's no wonder so many small businesses owners dread doing their books.
If you feel like throwing your computer out the window every time you open your accounting software, then you're not alone. 40% of small business owners state that bookkeeping and taxes are the worst part of owning their business.
The Costs of Traditional Accounting
It's not just a headache; it's also a huge time suck. One in three small businessess spend over 80 hours every year on payroll and taxes. That's two full work weeks!
This isn't cheap. The average cost of accounting in the first year of operation exceeds $4,000. Despite all the time, energy, and money spent on accounting, mistakes get made. Shockingly, 40% of small businesses are punished by the IRS each year for payroll mistakes.
It doesn't stop there. After the payroll is taken care of, there are bills to pay and invoices to send. All of which have to be meticulously recorded in the ledger. This process is so time-consuming that, on average, small businesses spend one and a half hours every day settling invoices.
And if you're not careful, it's easy to make mistakes that can cost you dearly. In fact, according to one study, 6.8% of deductions are overstated. Besides the accidental mistakes, there's also the potential for fraud. According to the Association of Certified Fraud Examiners, small businesses lose an average of 5% of their revenues to fraud each year.
Regulators don't make it any easier. The frequency and cost of government audits have skyrocketed in recent years, with the average business now being regularly audited.
The Blockchain Accounting Solution
It doesn't have to be this way. Blockchain accounting is the solution that small businesses have been waiting for. What is blockchain? It's a digital ledger that allows transactions to be recorded and verified securely. This means that your books will be more accurate, efficient, and secure.
From invoice fraud to wage theft, blockchain can help to prevent many of the most common types of accounting fraud. While blockchain has not been widely adopted for accounting yet, it's only a matter of time before this game-changing technology becomes the norm.
For instance, consider a traditional invoice, either as a simple PDF or a physical paper copy. This can be lost, stolen, or tampered with. With blockchain, each invoice would be stored in a secure digital ledger. So if there was ever any dispute, you could rest assured knowing that the invoices haven't been altered in any way.
Further, the traditional invoice can't as easily be financed because of its lack of transparency. With blockchain, however, the veracity of an invoice would be readily apparent to any potential lender, thus making it easier to get the financing you need to grow your business.
Invoicing isn't the only area where blockchain could help with accounting. Consider the act of making payroll. Currently, many businesses must rely on a third-party provider, such as ADP or Paychex. This can be expensive, and it doesn't work well for DAOs (decentralized autonomous organizations).
With blockchain, businesses could cut out the middleman and make payroll directly to employees. Even batch payments, such as paying multiple invoices at once, would be a breeze with blockchain.
After all, blockchain is set to save businesses billions of dollars in related areas. For instance, one study finds that blockchain will drive $10 billion in savings in cross-border payments by 2030. Another study, by Bain and Company, predicts that distributed ledger technology (DLT) could reduce trade finance operating costs by 50 percent to 80 percent.
Beyond mere theory, HSBC has implemented blokchain to cut the cost of settling forex trades by a quarter. The benefits of blockchain accounting are clear. If you're ready to ditch the paper trail and take your business into the future, then it's time to start using blockchain accounting software.
Get Started With Blockchain Accounting
If you have the coding skills, you can develop your own blockchain accounting software. However, if you're like most small business owners, then you probably don't have the time or resources to do this.
Bulla Network is an off-the-shelf blockchain accounting software solution that's specifically designed for small businesses. We make it easy to get started with blockchain, with no coding required.
Join our Discord or schedule a demo to get started.
