One-quarter of small businesses continue to record financial data on paper instead of keeping digital records, according to a new survey by Clutch, a B2B ratings and reviews firm, and the tactic is exposing these companies to security risks.
A press release from Clutch on Monday (Oct. 1) included data from its latest survey, which also found that 45 percent of small businesses are operating without a bookkeeper or accountant. Clutch surveyed 302 small business owners and decision-makers for its report.
Other findings reveal how small businesses manage a shortage of resources, with professionals being forced to multitask. For instance, 72 percent of businesses surveyed said one person handles both human resources and accounting responsibilities.
Rhett Molitor, co-founder of cloud accounting company Basis 365 Accounting, said this can be a mistake.
“HR, just like accounting is a specialized field. If you try to wing it, you’re probably going to get burned,” he said. “In most cases, the law is going to favor the employee.”
Molitor added that most small businesses cannot afford the mix of accounting and bookkeeping expertise they need to operate. But according to Clutch, most small businesses do, at least, deploy an accounting solution, with 53 percent using accounting software to manage finances. Of those companies, 74 percent say they use Quickbooks.
“Overall,” Clutch said, “the survey suggests that small businesses should carefully evaluate the resources they need to manage their finances effectively and securely.”
While small businesses struggle to invest in accounting personnel, accountants themselves are struggling to invest in technology. Separate research released earlier this year from K2E Canada in its “Accounting Operations and technology Survey” revealed 43 percent of respondents do not use workflow management software, while only 26 percent of small accounting firms have updated their tax software in the last five years.
Only 12 percent of sole accounting practitioners said they were “very likely” to adopt cloud-based accounting applications.