In recent years, accounting software for small businesses has seen enormous changes. Thankfully, cloud computing has rendered obsolete the practice of purchasing and installing bookkeeping software on a local computer.
Today, startups and small enterprises have a selection of online accounting software programs from which to choose. In addition to easing the burden of bookkeeping and accounting for small business owners, the technology offers a variety of other advantages.
But with so many web-based accounting solutions available, how can you determine which is best for you and your business?
To help with it below is a guide. After considering the answers to these questions, you should be able to limit your options swiftly and settle on the finest online accounting software for your needs.
Right for you
As a new business, the problem you face is that it’s easier to know if one of the online systems is right for you once you use it.
Before you decide on a web-based accounting solution, you should ask yourself these questions to help you figure out which one is best for your business. The points below may help you in how to choose online accounting software.
Does It Have A “VAT” Module That is Appropriate for Your Business?
If you are or believe you will be VAT-registered, you must verify certain data:
- Can it handle VAT cash and invoice accounting?
- Can it accommodate the scheme of flat-rate VAT?
- Does it generate a VAT return automatically?
- Can the VAT return be sent to HMRC directly from the software?
Not all online accounting software automatically does Reverse Charge calculations, so if your business has to follow complicated VAT rules, you should check to see if this feature is included. You might make mistakes on your VAT return if you don’t have this.
What Types of ‘Reporting’ are Offered?
- Do you need detailed reports at the end of the month, project-based records, or reports that look back for analysis?
Most accounting software will give you a variety of reports that will help you measure how well your business is doing and run it better. Some popular ones include:
- Monthly profit and loss statements that include comparisons to the previous 12 months
- Your assets, liabilities, and capital balance are reported on a monthly balance sheet
- Reports on your year’s top clients or partners
- For periods of 30, 60, and 90 days, aged debtors and creditors. Determine which features are most important to you and ensure that the selected system offers them.
Does It Include a ”Bank” Module?
Can you link your bank account to the software? Some require you to upload bank statements, while others let you set up an automatic feed from your bank account and credit cards to record all your banking transactions.
Automatic feeds are better because they save you time and ensure that your numbers are always accurate.
Does It Deal With ”Stock”?
Some systems can manage stock while others cannot. This is a must-have feature for you if you buy and sell goods.
Is There A Module for ”Payroll”?
Sometimes this feature comes with your software, and other times you can buy it as an add-on. Check if the payroll module lets you send RTI data directly to HMRC from the software.
What Types of ‘Invoice Templates’ are Available?
You can personalize your invoice templates in most online accounting programs, but sometimes you need more flexibility.
To make the basic template work for you, you might need assistance if your invoice requires more extensive terms and conditions. Therefore, if this is crucial to your company, you should investigate it.
An overview of the current financial year’s profit and loss, along with an estimate of the current tax liability
Does it support ‘Users’ with Various Levels of Permission?
lfyou are working with a group and want to give the sales and finance teams different levels of access, ensure the software you want will let you do that.
Does It Provide an Effective ‘Journals’ Module?
Accountants must adjust accounts that can’t be done through the “Banking” or “Invoicing” modules.
Many of these accounting entries, like adjusting accruals, prepayments, or monthly wages at the end of the year, are done through journals.
However, some accounting systems need a better way of entering journals, making it difficult for your accountant to match the numbers from your system to the Final Accounts.
Setting up Your Chosen System
There are important considerations to remember during the initial setup process once you have chosen which online accounts system to use.
lf your business is getting off the ground, you should consider the nature of your operations and how you want the reports to appear. For instance;
Categorising Sales
lf you sell products online and in person at shops or trade shows, you can divide your sales into “Website Sales” and “Exhibition Sales.”
lf you plan to export, you might want to group your sales by region, such as “UK sales,” “USA sales,” “EU sales,” etc. You can use any categories that work for your business.
Others Areas
You might require different account codes for salaries, rent, travel, phone and internet, printing and office supplies, etc., so you can look at the numbers better.
The exact steps will depend on the type of business you have, but you can probably expect to:
- Set all of the project codes and nominal codes that are
- Set up times for accounting
- Make sure that the asset register has the right depreciation rates, and
- You can add your logo and design to the sales invoice
Get the Foundations Right
Accounting means keeping track of important business processes like invoicing and billing, accounts receivable and payable, and reporting. Even though getting everything right cannot be easy. Your business can only grow or succeed with good accounting. Most of the time, the first steps you take in accounting are the most important, and picking the right software is key. Assess your accounting needs carefully, ask the questions above. Put features in order of importance based on your needs, and choose accounting software that has the features you need for the best experience.
99% of Southside Accountants clients use accounting software that is easy to use and fit with their need. We provide training and support to our clients on the use of software. Please feel free to contact us to become part of the team.
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