When you first started your business were you using a spreadsheet or handwritten books, or perhaps you still do? Well, we are going to convince you why changing to accounting software is the way forward, and we will give you not 1, not 5, but 10 good reasons!
How safe is a book or a spreadsheet? Yes, you can use a locked drawer or a password to protect them, but they are both very fallible forms of security. When you use accounting software it will have built-in security, and you know your data is safely stored and cannot be accessed.
You will also know you are complying with GDPR and Data Protection regulations as you have a duty to protect people’s personal data appropriately. Obviously, we would advise you to use carefully chosen passwords or 2FA (2-factor authentication) when available. Please see our blog on how to keep your data safe online for more details.
2. Access to Reporting
The beauty of software is that it has built-in reporting functions, and many have bespoke reports you can create as well. This enables not only end of year accounts to be far simpler but also you can gather data that will help you improve your business.
Being able to work out where revenue is coming from, track outgoings, see the average amount of time it takes clients to pay bills etc. can all be exceptionally helpful to you. Spreadsheets just can’t do that!
3. Fast Access to Data
The search function is amazing on accounting software, and you can find clients, invoices or purchase orders within a few simple steps, regardless of what years they are from. Searching on a spreadsheet or in physical books can take far longer. This can benefit you for business tasks or if you are on the phone with a customer you can access information straight away.
4. Securely Backed up Data
Your data will be automatically backed up by the cloud servers that the software uses, and this means you don’t need to worry about deleting a spreadsheet in error or your PC’s hard drive dying. It will all still be accessible with your log in.
5. Pretty Infallible
Now nothing is perfect and of course, mistakes can be made but they will come from the data you give any accounting software, rarely from the software itself. It doesn’t miscalculate things. Whereas one messed up formula or calculation can ruin a huge amount of data on a spreadsheet or in handwritten books, and you might spend hours trying to find the error. Computers are much cleverer than us, and you need your accounts to be accurate.
6. Can integrate with other parts of your business
The amazing thing about accounting software is that it can integrate with other functions in your business. For example, if you take payments by Stripe, you can set it up so they go onto your system automatically. These automations save time and money. Zoho Books has 40 business apps you can use! And tools such as Zapier can be set up to integrate anything that isn’t listed. You can also link it to your banking feed, so payments and outgoings are tagged and reconciled.
7. Can chase debtors automatically or systematically
You can look for debtors according to how late the payment is and send out reminders or you can set them up automatically to send after set periods. This means your debt management can be kept up to date and we all know that if the money is received faster, then your cash flow benefits.
8. More Professional for Invoices
You can set up professional invoices to send to clients with your branding on them. This looks far more professional than something created in Word. You are able to add links to privacy policies or terms and conditions as well as payment terms, don’t forget to explain what the fees are for late payments.
9. Makes end of year accounting easier
Whether you have an accountant or do it yourself the end of year accounts and tax return are what most people dread. Having the data at your fingertips with reports and easy to view figures makes the whole process so much simpler.
You can also link receipts (software varies, some you can take photos and add straight to the app, or link emails etc.) so when it comes to the accountant asking for all those receipts you can have it ready to go. Or ideally up to date already.
10. By 2024 it won’t be a choice!
MTD ITSA– Making Tax Digital – Income Tax Self Assessment has been postponed a few times but it is set to take effect from 2024 whereby all self-assessment tax returns will have to be done electronically. Please see our blog on this subject for more info https://www.businessaccountingbasics.co.uk/making-tax-digital-itsa/
If you are VAT registered with a turnover of £85k+ then you should already be complying with this legislation. There is as yet no date set for corporation tax returns.
So, have we convinced you as to why you should use accounting software? Once you change you won’t look back. There are many options to choose from such as FreshBooks, Zoho Books and QuickBooks to name just 3, but feel free to check out our other blogs to gather more information, so you can make an informed choice according to your business needs.
To read more about why you should use accounting software read our article on the best packages for your small business.