Accounting software can never replace the services of a professional accountant, but it can act as a great support tool to enable more accurate and accessible financial records.
Choosing the right accounting software package can save you time and money, while also giving you a greater understanding of your finances. Modern accounting software is designed to be user-friendly and easy to set up, even if you have no prior knowledge of accounting, so there is no reason to be daunted if you are selecting accounting software for the first time.
Benefits of accounting software
It is easier to prepare your accounts
- Using accounting software means that precious time can be saved at when preparing accounts and tax returns as the data is already held in your database
- The HMRC Making Tax Digital project will soon make it a legal requirement to submit certain records digitally so accounting software will be become a necessity rather than an option
It allows you to share your financial data with others for easier collaboration
Some of the features included in popular accounting software include;
- Allowing third parties access to your data, such as your accountant or HMRC
- Automatically generating debt-chasing letters for those customers behind on their invoices
- Segmenting customers, based on their purchasing habits, to send them targeted offers and communications
It can make many tasks quicker and easier
- Checking your monthly management accounts, VAT returns, bank statements and other records becomes as easy as logging in to your software
- Bookkeeping can be simplified through automation of tasks, such as automatic generation of invoices and stock levels
- Most accounting software offers add-on payroll services too
- Online banking and tax filing is supported by most of the popular accounting software
It gives you data in real time
- You can view debtors, creditors, account balances, VAT balances etc. all in real time, giving you an ongoing picture of your business at any point
- You can generate balance sheets, profit and loss or cash flow reports or view your performance against budget
- Depending on your package, you may even be able to see how profitable a particular job has been
Which accounting software?
With a myriad of software options available on the market, it can be a daunting process to select the right one. We have created handy go-to reviews of the most popular software, including FreeAgent, Xero, Quickbooks and Sage One, all of which have different features and strengths. Our qualified accounts team, who are extensively trained in all software, can offer advice and demos to help you select the right software package for your business.
Before selecting your software, it is important to consider your own priorities and preferences. This will help you be clear about which functionality and features are most important to you and evaluate packages objectively. Some questions you may wish to ask yourself include:
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WHICH BOOKKEEPING TASKS DO YOU NEED THE SOFTWARE TO COMPLETE?
Most importantly, you should consider which bookkeeping tasks you would like your software to support you with, as this is where the bulk of the time- and cost-saving will be driven from. This could include; invoicing; receipts; payments; banking; VAT, tax returns, stock control or payroll.
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WHO IS GOING TO USE THE SOFTWARE?
Those individuals who are actually going to use the package should be involved in choosing it and you should consider their needs ahead of final selection. Depending on the size of your business, you or your employees may be required to access or input data into the software. Consider the different tasks that will be completed, and how and when they may take place. For example, will the software be accessed from a PC or a mobile device? You should also involve your accountant at this stage. They will be able to offer advice on the different packages available and it is also important that they are able to work with the software to produce end-of-year accounts and satisfy auditing requirements if necessary.
The support offered by the software provider is also an important consideration. If you are inexperienced in accounting or technological fields, then you may require software that comes with a higher level of support. You should consider when and how support is given e.g. 24/7? Phone or email?
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WHAT FINANCIAL INFORMATION WOULD BE USEFUL FOR YOUR BUSINESS?
Accounting software can be invaluable in gaining information for your business over and above that required for accounts records. Accounting software gives quick access to an overall view of your business, often represented graphically or visually. This overview can help you or your accountant make business decisions going forward.
You should also consider how and when you will need to import and/or export your financial data, and whether your software permits this.
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DO YOU HAVE ANY PARTICULAR REQUIREMENTS?
Depending on your business, you may have particular needs that your software could help with. For example, if you run an online business, your software could integrate with your ecommerce platform, automatically pulling through sales and stock data. If you trade internationally or have more than one business, then you will need software that can handle this.
You may even wish to tailor the interface to suit your specific requirements. For example, you may wish to add custom fields to your data e.g. customer details to enhance how you use the software.
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DOES IT OFFER THE NECESSARY ACCOUNTING AND DATA COMPLIANCE?
Some accounting software may be attractive because of their ease of use and cost, but they may not provide the compliance that you require. As a minimum you should be able to:
- Track all of the transactions that took place during the year
- Conform to current accounting best practice
- Back up your data automatically and ensure that you are using the correct version
- Retain records for the current minimum requirements for accounting data
- Meet requirements for current data protection legislation and the forthcoming introduction of eGDPR.
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WHAT IS YOUR BUDGET?
Although all accounting software providers will offer basic packages, the right option for you will depend on the complexity of your business and what you require the system to do. The more features and add-ons included in the software then the more expensive it will be. The number of users may also impact the final cost. Primarily, you should select a system based on what you need it to do and consider costs as a secondary decision. There is no point in selecting a package based on price for it to be insufficient for your needs. However, you should also take into account costs for staff training, implementation and ongoing support/maintenance. Selection of the right software package is crucial as you will invest time and money in building the system to your exact specification.
