Why would you want to use accounting software? Why wouldn’t you just let an accountant do all the work for you? There are a few good reasons why you might want to. I’ll list 10 of them below.
Using accounting software and doing the bookkeeping yourself may well be cheaper than paying someone else to do it for you. You can get software for under £10 per month. Depending on how many transactions go through your account, the cost to pay someone else to do your bookkeeping will likely exceed this.
2. Time saving
If you currently provide information to your accountant in a spreadsheet, then using software might be a more efficient way of providing this information. You can link the software to your bank accounts, set up rules to automatically classify transactions and anything that doesn’t fall within these rules can be easily categorised. It can be a great time saver
3. Real time reporting for your business
Once all the items in your bank have been reconciled, you will be able to see an up to date position on how your business is performing. If you are technically savvy, or with the help of your accountant, it is possible to set up customised reporting to allow you to see the status of your business in the way that is most beneficial to you.
4. Up to date information when asking a question of your accountant
If you have a query about how your business is performing, your accountant will be able to see the latest information and be able to give you the best possible advice.
5. Control over your finances
Both of these last two points allow you to have more control over your finances, allowing you to make better decisions at the right time. Knowing how much profit you have made, or how much cash is available is key to making the best business decisions possible.
6. Invoicing your customers
Most accounting systems will have an automated invoicing system. If you don’t currently have an invoicing system, this will be a definite time saving as you can create and send an invoice by email in just a few seconds. If you already have an invoicing system, it may be a cheaper option to have an all-in-one system.
7. Linking invoices to payments
Many accounting systems will also allow you to attach invoices that your supplier sends you to your purchases. This means that if you or your accountant ever need to find the invoice to look into the details, it is right there and you won’t need to search through a pile of paperwork or your email inbox. It will also be beneficial if HMRC ever has any queries about the costs you are claiming as tax deductible expenses for the same reason.
8. Cash flow management
If you are using invoicing and bills functionality in your software, it will ask you to enter payment terms. This means that it will be possible to see what payments you expect to receive over the next weeks and months, as well as what you need to pay in that time scale. Using this information, you will be able to understand how much cash is available for purchases or investments.
9. Easier to keep on top of your paperwork
If you have an automated system then it will be much easier to keep on top of your paperwork on a weekly or monthly basis rather than leaving everything until year end when you may have forgotten what some of the earlier transactions relate to.
Accounting software may have plugins that you can use to increase the automation of your business. Plugins such as Receiptbank or Hubdoc allow you to do things such as taking a photo of receipts on your smartphone and getting them to upload straight to your software or automatically importing bills from your supplier accounts so they appear in your software as soon as they are available.
What options are there?
There are a number of software options available. The two most widely are be Xero (pronounced “zero”) and Quickbooks. Both of them offer you free trial options so you can potentially decide which you get on best with. They are both paid for options, and free software is available although they are obviously likely to have less functionality.
At Anderson Accounts, we are a Xero Bronze Partner and may be able to offer you a deal not available directly with them. Xero is my preferred software which I have been using since managing my business on a spreadsheet became unwieldy. I feel it is relatively easy to use and I have completed a qualification that will allow me to assist you in setting it up to your individual requirements.
If you are interested in a Xero trial, feel free to get in touch and I can assist you with this. If you prefer to use an alternative system I am still able to assist you with your accounts but unfortunately I will be unable to assist in the set up of the software.