Things to Consider while Choosing Accounting Software for Your Small Business
Keeping records of your financial transactions is vital for the acceleration of your business’ growth. But, it’s easy to get lost in organising and arranging financial documents whilst you’re focusing on your other day-to-day operations and their setbacks. The last thing you want will be a complication with your accounting. Using accounting software that meets your company’s needs will eliminate -or at least minimise- your stress and increase your efficiency, even your revenue, if you prefer cloud-based software.
What Is Small Business Accounting Software?
Accounting software decreases the time spent on operations done by hand, using large transaction journals, from hours to minutes and seconds. It’s an “invaluable resource” for modern businesses, according to Investopedia. It helps with bookkeeping, recording, and reporting a company’s financial operations, including online tax filing with HMRC.
What Are The Benefits Of Using Accounting Software For Your Business?
Besides making an extremely time-consuming operation shorter and easier, accounting software may help you with;
- generating reports of your cashflow
- keeping records of your profit and loss
- projecting your corporation tax
- automate your tax filings
- keeping your financial data secure
- focusing more on the growth of your business
Your accountant can have access from anywhere if you use cloud-based accounting software, and you can easily monitor your financial data in real-time. You can keep all your customer data, receipts, and invoices organised in one place. Some software even allows you to connect with your business bank account and automate payrolls and tax payments. Retailers might benefit from linking their inventory system to their accounting software for easier stock control. You’ll have various advantages according to your business type, size, and plans.
What Are The Types Of Small Business Accounting Software?
You can use either online or offline accounting software. Online software, also called cloud-based software, is usually more cost-effective than offline software. You don’t need to invest in servers nor computers with advanced configurations if you don’t already own them. The only disadvantage of online software is losing access to your data if your internet connection is interrupted. Accounting software is a fast-growing market, and traditional accounting practices aren’t the most efficient methods for bookkeeping, according to a report by Finance Online.
Almost all cloud-based accounting software have free versions or limited trials periods. One of the most important things you shouldn’t do is to decide before the experience. You might not be able to use all the features in free versions or trials, but it’s also an opportunity to see if you even need those features or how often you’ll need them. Consult your accountant before choosing free versions or trial periods of software. You can prepare a checklist to see what to pay attention to.
You won’t need functions to monitor stocks or create payslips for your employees if you’re a sole trader or self-employed in your limited company.
You can share your login information with your accountant, but that might cause a problem if you both want to access it simultaneously. Also, sharing your personal information, even with your accountant, is not recommended for safety and privacy reasons. Finally, adding another user might increase the subscription fee, so you might want to consider a cheaper version if you’re working with a tight budget.
Access to details of your expenses, income, liabilities, and assets should be easy. Being able to connect your business bank account to your accounting software is another plus. You can check if you can manage VAT, PAYE, Self-Assessment tax returns, and end-of-year accounts filing with HMRC.
Check if you can customise your invoices and other business documents you create using the software.
The software should manage complex VAT rules if your annual turnover exceeds £85,000. You should easily be able to calculate Flat Rate VAT for your small business.
You should be able to export reports in PDF and Excel formats easily. Check if you can generate reports to monitor at least your monthly and annual profit&loss, corporation tax forecast, and balance sheets.
Last but not least, remember to check the quality of customer service and compliance provided. You don’t want to wait days to get support when you had a problem with your software or someone breaking into your account because of a lack of security. You might also want to look at if your software is compatible with Making Tax Digital for VAT.
The best accounting software “for you” mostly depends on your business and accountant’s advice. Still, it’s good to have a look at some of the best accounting software around the industry.
Canada-based Freshbooks was one of the ‘Editor’s Choices’ of PCMag UK in 2020. The cheapest plan of the software offers every fundamental feature you need as a sole trader.
Another ‘Editor’s Choice’ by PCMag UK is Intuit QuickBooks Online. QuickBooks also has desktop applications for Mac and PC.
Xero is one of the most widely used accounting software globally. New Zealandia company is in the account software business since 2006.
Small Business Accounting Software of the Year (2020) Accounting Excellence winner, FreeAgent, offers VAT, Self Assessment, and Corporation Tax solutions for sole traders and small businesses in the UK for more than ten years.
5. Zoho Books
Zoho is a good alternative if you have a limited budget. It’s one of the most affordable and cost-efficient accounting software in the market.
Founded in London, KashFlow also targets specifically small businesses. The software is the winner or runner up of many prestigious awards such as Software Satisfaction Awards and Accounting Excellence.
Sage was a humble British startup from Newcastle almost 40 years ago. Despite being a little expensive, Sage offers extensive customisation options for your business.