Business accounting software is designed so people who are not accountants find it easy to use. Choosing the right package will put you in control of your business. But when is the right time to switch?
All businesses are legally required to keep accurate financial records, but computerising your accounting systems can have wider benefits. It can save you time, allow you to file government returns online (like VAT) - and even help with day-to-day jobs like invoicing.
"Accounting software is easy, mature and cheap enough for it to make sense for anyone. It is more efficient, both in terms of time and cost, than traditional accounting," says Jon Norris, web editor at Crunch Online Accountants.
"Different systems will be aimed at differently sized businesses - for example some is geared towards freelancers, contractors and small businesses. At the other end of the scale, you have software used by multinationals with many thousands of employees."
Business accounting software: the cost
If you're buying specialised business accounting software, it's crucial to make sure that you're aware of the additional costs involved apart from the package itself. Compare initial lower upfront costs with annual fees.
Ask yourself these questions before you buy:
- Will expensive training be required to use the business accounting software?
- Do you have to pay for additional software licences if you take on extra users?
- Does the business accounting software have the capacity to grow with your business?
- Can you upgrade the business accounting software if required?
- Would it be easy to transfer your data to a new system should you need to switch?
- Is the software compatible with what your accountant uses?
- Can you cancel a long-term contract easily if your circumstances changed?
Talk to similar businesses. Some business sectors have quite specific accounting needs. The software should accommodate your company, not the other way around.
"The key is to make sure you get proper accounting software backed by a reputable firm, not just bookkeeping software," stresses Norris.
"Bookkeeping software allows you to keep track of your incomings and outgoings, but will most likely not maintain the integrity of your accounts, and an accountant will still be required to make sure everything is correct."
Is my business accounting software HMRC compliant?
If you are registered for VAT, your system must meet your legal obligations to hold records correctly. Make sure that HMRC will accept forms and returns from your preferred business accounting software by checking its approved list.
"Software cannot be accredited in the same way accountants can," points out Norris. "Software can be HMRC compliant, meaning it can submit information using their online filing system, but it is the actual accountancy firm that is accredited by an accounting body, regardless of the software they use."
"Embracing business accounting software as soon as possible makes sense for all small businesses, apart from those with either a debilitating fear of computers, or a deep love of manual bookkeeping. Accounting software makes running your business easier," concludes Norris.