When you run a small business, accounting software can be your best friend. Here's a look at why you'd need it and which features you should look out for when choosing one. We'll also give you a rundown of some of the best-rated accounting software packages for small businesses in the UK.
Well, strictly speaking, you don't have to have accounting software. HMRC's rules require you to keep a record of all your business transactions — both income and expenses. But the rules don't specify which format these records should take, as long as they're complete, accurate and readable.
You could do your accounts on an Excel spreadsheet and HMRC wouldn't bat an eyelid – as long as they're complete, accurate and readable, of course. You could even buy a physical ledger book and write in all your transactions by hand.But, ask yourself:
HMRC can slap you with penalties and interest if there are mistakes in your accounts. And if your business records are lost, stolen or destroyed, you'll need to do your best to recreate them.Is it worth taking these risks when there's a better way?
Put simply, accounting software can save you time, money and trouble. Here are some of the key advantages:
As a bonus, many accounting software packages automatically create all sorts of interesting and useful reports in real time, such as your:
The reporting feature means you don't need to guess — or carry out lengthy calculations — if you want to find out how well your business is doing.
There are lots of accounting software packages out there. And all have their pros and cons. So how do you decide which one's right for you?Here are a few things you should consider:
Many accounting software packages charge a fee. This fee is tax-deductible because you use the accounting software for business purposes.
Nevertheless, a cost is still a cost. It's important to make sure you don't spend more than you can afford, especially if you're starting out and money's tight.You may be able to keep costs down by:
It's a good idea to carry out a needs analysis before you start looking at accounting software. By focusing on what you need, you'll narrow down your choices and also keep costs in check.To conduct a needs analysis, ask yourself:
One of the biggest advantages of using accounting software is that it can make your life easier. So, you should choose a program you can get to grips with quickly without too much of a learning curve.Most modern accounting software programs are relatively easy to learn and get running. That said, it doesn't hurt to make sure. If available, sign up for a free trial and take the software out for a spin before you commit.
Reading reviews from independent reviewers and other users can give you a better idea of how well the software fares in the real world. In particular, watch out for what people are saying about the quality of customer support.Some useful websites to check out for independent reviews and advice include PCMag and Trustpilot.