One-quarter of small businesses (25%) track their finances on paper instead of a computer, according to a new survey by Clutch, the leading B2B research, ratings, and reviews company.

Manual accounting is more time consuming, more prone to human error, and often faces greater damage from physical disasters, such as fires or floods.

Nearly Half of Small Businesses Lack In-House Accounting Staff

The survey also reveals that 45% of small businesses don't have an accountant or bookkeeper.

"Most small businesses need a combination of a controller, an accounting manager, and a [bookkeeper]," said Rhett Molitor, co-founder of Basis 365 Accounting, a cloud-based accounting service. "Small businesses may not be able to afford that, so we usually see them under-hire."

Experts recommend outsourcing as an affordable solution for small businesses that can't afford in-house accounting staff.

Small Businesses Combine HR and Accounting Responsibilities, Risking Legal Trouble

At nearly three-quarters of small businesses (72%), one person handles both HR and accounting responsibilities.

It's often the accountant who ends up taking on HR tasks, experts said. This situation is problematic given that accountants typically are not trained to handle sensitive HR situations, such as discrimination and harassment.

"HR, just like accounting, is a specialized field," Molitor said. "If you try to wing it, you're probably going to get burned. In most cases, the law is going to favor the employee."

QuickBooks Reigns Among Small Businesses That Use Accounting Software

More than half of small businesses (53%) use accounting software to manage their finances. The most popular option is QuickBooks, used by 74% of small businesses.

Software can ease the complicated task of accounting for small businesses.

Donna Conte, service area leader for accounting services at Warren Averett, a full-service accounting and advisory firm, commented on accounting software's strengths for small businesses: "It's not expensive. It offers the benefits of information right at your fingertips, plus security and scalability."

Jon Fasoli, director of product management at Intuit, the software company behind QuickBooks, said they built QuickBooks with small businesses in mind.

"We built QuickBooks Online from the ground up as an easy-to-use yet powerful platform for small businesses looking to do less back-end manual entry data and instead focus on what matters most – running and growing their business," Fasoli said.

Overall, the survey suggests that small businesses should carefully evaluate the resources they need to manage their finances effectively and securely.

Clutch surveyed 302 small business owners and managers to learn more about their accounting resources.