Bookkeeping and accountancy are, for most small business owners, amongst the least cherished tasks involved with running a business.
Entering each and every invoice and receipt into your records is time consuming and a hassle that most business owners could do without. Sadly, unless you are willing and able to bear the cost of a professional bookkeeper, it is a task that you must complete.
Do I need accounting software?
In the past, small business’ accounts were run almost exclusively on paper ledgers. The system required no more than a basic knowledge of the double entry bookkeeping system, and a lot of time. If you are a sole trader running a business that does not require you to deal with stock, paper bookkeeping may still be a viable option. If you are not particularly confident with computers, or if you simply find it easier to deal with accounts on paper, there is nothing to stop you continuing to use a ledger system. However, there are a number of factors that you should consider.
Primarily, if you have any employees or deal with inventory of anything but the smallest quantity, paper bookkeeping is likely to be simply too time consuming. While the entry process might not take any longer, performing monthly and annual calculations will be a very, very slow process. Accountancy software on the other hand, will perform these tasks automatically and virtually instantly, while generating valuable reports that you simply would not be able to produce by hand.
Secondly, while in the past accountancy software had been the preserve of large corporations, with a price tag to match, today it is possible to buy a perfectly adequate accounting solution for less than £50. Indeed, there is even an increasing number of free, open source accounting solutions that are beginning to give the major players a run for their money.
What do I need from my software?
When choosing accountancy software, you should always have the needs of your business at the forefront of your mind. Simply going for the cheapest option will be a massive false economy if it does not perform the tasks you need it to quickly and easily. Instead, you should concentrate on finding a package that fulfils your requirements.
There are a number of functions that you might want your accountancy package to perform. For example:
- Payroll provision
- Inventory tracking
- Sales monitoring
- Automated invoice generation
- Integration with existing software (generally contact management software)
All of these features are readily available in affordable accountancy packages, but the combination of features you require might not all be present in all of the packages. If you work in a particularly niche industry, you may find it beneficial to investigate sector-specific accountancy packages. While these are likely to be more expensive, they will include all the features you need from your software.
If you currently employ an accountant to put together your annual reports, or think that you might do in the future, it is also vitally important that you ensure they will be able to interpret the data provided by your software. Some accountants will only accept records in certain formats due to limitations in their own software. As such, you should always talk to your accountant before choosing an accountancy package.
Similarly, many banks now offer their customers the ability to download statements directly into their accountancy software. If this is important to you, you should make sure that you buy a package that can accept statements in the format provided by your bank.
Scalability and support
As your business grows, so too will your accounting requirements. Scalability is therefore an important concern when choosing accountancy software.
Some manufacturers produce modular software, allowing users to ‘plug in’ the modules they need to fulfil their needs. This can result in a more cost effective solution as you are not paying for features you won’t use. Perhaps more importantly, though, it also results in a scalable solution that will grow with your business.
If you do not currently operate a payroll system, but think you might do in the future, you should choose a package that allows you to attach a payroll module. Alternatively, you should investigate the format in which the software will export records; if you predict that you may migrate to a different package at some point in the future it is vital that you choose software that exports records in an industry standard format such as CSV.
It is also important that you consider the potential cost of support for your accountancy software. While most packages will include documentation of some sort, personal support can be costly. The more expensive software tends to include a certain number of hours’ free support, while cheaper options will require you to pay for help. You should make sure that you factor this into your decision.
Finally, it is worth looking into which software manufacturers will offer you a free trial of their products. There is a significant difference in user experience between different packages, and much of your choice is likely to be down to personal preference. As such, you should ‘try before you buy’ whenever possible.
Choosing accountancy software might seem even more dull than actually doing your accounts. But if you put a bit of effort into your initial decision you can save yourself a significant amount of time, money and hassle at a later date. As long as you keep referring back to your business requirements, and bear in mind the potential growth of your organisation, you should be able to find a package that will remain suitable for years to come.