You may be familiar with the phrase Making Tax Digital (MTD), but for those of you who aren’t, this refers to the overhaul of the tax system which was initiated when Gordon Brown was Chancellor of the Exchequer and was (then) scheduled to go live by 2019. The review included closure of 137 tax offices by 2025, substantial reduction of staff, and the establishment of 13 regional tax offices, and, most importantly, completely new computer systems. However, as a result of various delays the new digital infrastructure is now set to go live by 2020 at the earliest, and there is a huge number of Small to Medium-sized Enterprises (SMEs) which have simply not yet embraced keeping computerised records. It is thus crucial that these businesses take steps to review their accounting records now and take the necessary steps to be ahead of the game.
When you’re running a busy, growing business, it is all too easy to overlook the accounts side, but it’s vital to use accounting software that’ll help you keep track of your business finances without consuming your business running and expansion time. You’ll have heard of some of the options like Intuit QuickBooks, Xero and Sage, but which accounting system should a small or medium business owner or manager select?
Making sense of the options available can be quite a task. Who has the time to trawl the market-place and compare the capabilities and costs of each type of accounting software? At Tarrant Green & Company we’ve guided staff at all levels on accounting and management information systems. For us, it’s not a theoretical exercise, we’ve had experience assessing, implementing and then using a wide variety of different accounting systems, so we know what kinds of accounting software suits the needs of different businesses. Here are a few pointers on selecting accounting software that will make your life easier and ensure you’re in control of your financial information.
Types of accounting software
It’s always preferable for you to maintain your own day-to-day records. A good accounting system will automate routine tasks saving you time and eliminating errors. Your options range from basic single-entry bookkeeping systems to more advanced double-entry systems complete with general ledger, accounts payable and accounts receivables, plus added functionality such as inventory management, fixed assets and invoicing.
Long ago you had to select your accounting software and install it on your own computer system for one or multiple users. This is still an option and its always wise to start out by deciding how many people will need access to the system, but now there are other choices too:
- Accounts software at your premises – you usually pay a license fee to use the software which you load onto your server.
- Software-as-a-service (SaaS) accounting programs – this is a pay-per-use option, with usage costs paid monthly, where the system resides on the software company’s server.
- Cloud computing accounting systems – these plans can start with a free to use service, but generally for serious business use you then need to subscribe to enhanced paid-for services. The system is accessed over the internet.
Your accounting requirements
At its most basic level an accounting system should enable you to keep track of money paid out by the business and money received as customers settle their invoices. But many businesses also have far more sophisticated requirements due to the nature of their operations.
Since every business is different, it’s necessary to identify the accounting functionality that matters most, and this becomes the fundamental requirement for your business:
- Quotes and their conversion to invoices following customer go-ahead
- Invoicing with ready-automation of repeat invoices
- Automated statements and payment reminders
- Payroll including PAYE, National Insurance, sick pay, maternity pay
- Stock management and data output or integration for delivery routes, reorder processes and e-commerce
- Setting up purchase orders and reporting on commitments
- Tracking and reporting on outgoing payments and expenses
- Tracking billable hours and expenses and linking to client invoicing
- Tax calculations and management of tax
- Bank feeds for up-to-the-moment visibility of cash flow
- Reconciliation tools for smart management of finances
- Customisation options and integration with apps
- Management reports for better decision-making
- Admin functions to control access security, user levels and approvals
Don’t forget there’s industry-specific accounts systems
There’s a cost-effective accounts system to suit most business needs. Systems such as VT Transaction, KashFlow and Intuit QuickBooks provide an excellent solution to everyday accounting requirements. We’ve found that clients favour QuickBooks because it is geared to expand with your business, starting at a very cost monthly cost, currently £1.80 per month for the first three months for a basic self-employed person. This is a cloud-based system which grows with your business, and there are very useful add-ons, including mileage tracking, and expenses. It’s easy to use, and has first class support.
But don’t be limited by general accounting systems. For many industry sectors, there are specialist systems too. It’s always worthwhile checking whether software developers have addressed the needs of your industry with a specialist accounting system. For example, at Tarrant Green & Co we’ve identified, installed and trained staff on accounting systems for a variety of legal practices with systems such as Quill Pinpoint, Opsis and Thompson Elite. For sophisticated tax management needs, we’d advocate a system like TaxCalc, which integrates accounting with the generation of tax returns. For debt management companies, Tigersolv is a specialist debt and insolvency system which we’ve successfully implemented.
Need a little help?
Contact Tarrant Green & Co for practical help to select and implement the right accounting system for your business. You can email us at firstname.lastname@example.org or call +44(0)1438 869 644.