Regardless of size, all businesses are legally required to keep accurate financial records; but that’s not to say that ‘doing the books’ should leave you overwhelmed with admin. The right software can make it a lot easier, and at the same time give you valuable insight into your business. Read our guide to the essential software you need to be your own accountant so you can save money without the stress.
What can software do for your business?
Not all businesses need specialist accounting software. To take one example, if you’re a self-employed consultant, you might find yourself handling just a few client invoices a month, and very little in the way of expenses. It’s still important to log these items, but this can easily be done without specialist tools. In this instance, you could keep track of everything with just a simple spreadsheet. List paid and unpaid invoices along with outgoings over each monthly period.
When to think about getting software
Your business might have very few transactions to handle in the early startup stage, but once you get more customers, your finances can quickly become a lot more complicated. It is a good idea to investigate some specialist software early on.
The benefits of accounting software
The biggest potential benefit is greater efficiency. Instead of inputting the same data in lots of spreadsheets, you can log a transaction once, and it’s automatically included in all your key financial reports. Automatic calculation means there’s less chance for error, while day-to-day tasks such as creating invoices and reconciling bank transactions can become quicker and easier.
Ease of use ought to be a top priority as well. The software you are looking at might be packed with features, but this counts for little if it’s hard to make sense of it all. As you think about what’s relevant to your particular business, it’s worth paying special attention to the following features…
Simple transaction logging
Keeping track of what’s coming in and going out of your business is a key element of bookkeeping. If you receive a bill for a business expense, for instance, your software should allow you to log it easily, and either pay it immediately or set a date for payment. It’s also useful to be able to scan receipts
A level of professionalism
When billing customers, the ability to generate personalised invoices with your logo can help to give a professional impression of your business; as can the ability to send e-invoices. Firstly, you enter in the customer’s details, and this information captured, so handling repeat orders becomes quick and easy.
For income and expenses, ‘automatic reconciliation’ is a vital feature to look out for. This means that each transaction can be matched to your bank account. This helps to makes sure your books balance and your accounts are accurate.
When looking at the reporting features of a particular software, it’s worth focusing less on the number of separate reports it’s possible to generate, and more on whether the software is capable of giving you the information you need in a straightforward way.
The basics include a balance sheet and profit and loss account. But on top of this, you should also be able to generate insights such as who are your top customers and what bills you have outstanding.
Cashflow is another area where reporting can help you better understand where your business is heading. Essential features to look for include automatic alerts and reminders in the event that customer accounts become overdue, and alerts in the event that you are no longer on track to meet revenue estimates.
Choosing the right package for your business
Some of the UK’s biggest names in business accounts for smaller businesses are Xero, Sage and QuickBooks. As well as essential bookkeeping and reporting features, the basic packages from each of these providers include the ability to submit VAT online and automate bank feeds. Even if you don’t opt for these providers, they give a useful understanding of the type of features to look out for.
However, if you decide that doing your own bookkeeping isn’t for you, that’s okay! There are plenty of accountants out there who’ll be able to help you out and they can cost surprisingly little. Find out more about accounting and tax services here.