“Accounting software” covers a vast range of products with varying degrees of sophistication and functionality. What is suitable for one business may not be suitable for another.
Whilst throwing all receipts into a bag and listing and summarising them many months later is one way of keeping records, this is very inefficient and time consuming. Listing them out manually on paper when they are received or when you get paid is a step forward, and one step up from that is a spreadsheet. This does at least add up the figures for you, reducing the risk of error, but spreadsheets are not infallible. Add new rows and forget to change a formula, mistype a comma instead of a full stop, overwrite a previous version in error….the list goes on.
All of the above methods are very labour intensive, with lots of typing of the data. What information does it provide to you?
Making Tax Digital for VAT is here, and HMRC continues it development of the Making Tax Digital for Income Tax, although this is some way down the line.
If your business is compulsorily VAT registered, some form of software is necessary to submit VAT returns in a digital format to HMRC. This could be “bridging software” if you are using spreadsheets, but more often than not, some form of accounting software provides the solution.
There is now a huge, and indeed, ever increasing choice of tools available, designed to make life as easy as possible for the small business, and the relaxation of banking laws (open banking) makes it easier than ever for new entrants into the market place, all vying for the same end user market.
Choices – choices – choices
You could open a business bank account in literally a few minutes and be up and running in a couple of days. This could well be free. You would not be able to issue sales invoices through here though. These banks allow the export of data into a format that could be converted to a spreadsheet for analysis, or it could link directly to underlying accounts software, for which there is likely to be a monthly charge (although fairly minimal).
Another option for the small business is a prepaid current bank account – i.e. it requires you to be in credit all the time, but these do have accounting functionality built in. This includes the ability to send invoices to customers and chase them if they have not paid, and the categorisation of payments to different expense headings. It also captures the receipt by taking a photograph) and stores it alongside the expense payment. Take a photo and throw the bill away!
Modern accounting software can link to banks and other financial institutions and bring the transactions straight into the accounting records – a huge time saver.
If you have a number of suppliers you buy from and need to process invoices, there are data extraction tools that recognise the information on the invoice; name, amount, VAT, etc. and pass this information to the accounting software (together with a copy of the invoice) automatically. This is also a huge time saver.
There are a wide range of other features and enhancements which are available, taking your record keeping and management information to a whole new level.
In summary though, if you are still “manual” or using spreadsheets, come and talk to us about the options available which could free up your time and even save you money!
At Glover Stanbury, all of our services are designed to add significant value to your business and personal wealth. read more