Running a business comes with lots of different hats to wear and matters to deal with. One of the things we need to consider is record keeping.
It is an HMRC requirement that records are kept in a correct manner, that they are accurate, factual and up-to-date. Accounting software ensures that your records are compliant.
That is, however, not the only thing that accounting software can provide and so I wanted to let you know what their main benefits are. Before you ask, there are no real disadvantages of accounting software…apart from the cost (which is tax deductible anyway).
So, what are the main advantages of accounting software?
Most accounting software is in the cloud, which means you can keep your records current no matter where you are – even on the beach! The software uses security that is encrypted and secure as standard.
If you are not a VAT registered business, you need to be aware of your turnover figures to know whether you need to register for VAT. Your accounting software can run reports on your 12-month rolling period at any time, and therefore determine if you need to be VAT registered.
If you are trading as a limited company, it has to be profitable before you are able to take any dividends. The software can provide you with a profit and loss account which will help ascertain if a dividend can be paid.
Different apps can be added to your software to enable your bookkeeping to be easier, faster and more efficient. Artificial Intelligence is an amazing thing and is available to us in many different forms: an example here is the uploading of invoices, which are then read and processed easily by the accounting software.
Debtors’ details can be easily obtained, meaning you are able to chase funds and hopefully ease cash flow. Better decision making can be made by using the various reports included within the software. These can help with stock control, purchasing power and can be bespoke to the user.
There are lots of different types of software available, so it may be hard to decide which is the best one. To help you ensure you have the correct one for your business, speak to your accountant; they will be able to advise you on which one is most suitable for your needs.
Once you have your accounting software in place, it is worthwhile taking some time to learn its capabilities, and ensure you know where to find the reports and information that can support your business.
You may find that the eighth podcast in our series Your Business Hour, where we talk about various accounting softwares from a user’s point of view, is also helpful in making your decision.
Please always seek professional advice before taking any action. We are happy to answer questions in future issues. Send your questions through the Contact Us page on our website: champconsultants.co.uk.
Chantal Baker is the director and founder of Champ Consultants Ltd, an accountancy and tax consultancy practice in Caterham. Please follow us on our various social media channels.