Sara Dennis, a Director at Bevan Buckland LLP with over 20 years of experience at the firm, specialises in providing VAT and tax advice to small and medium-sized businesses. Sara also assists clients with implementing new software, and this is her advice to start-up businesses.
What is accounting software?
Accounting software is an online program or application designed to manage and streamline an organisation’s financial practices. This software enables businesses to process and track transactions, generate financial statements, and perform other accounting-related tasks.
As accounting software automates many tasks involved in financial management, such as payroll processing and generating financial reports, it can improve accuracy and efficiency within a business. An Intuit (QuickBooks) report found that 89% of small businesses that use accounting software feel that it is essential for their business, while 63% say that it has helped them by saving time and increasing productivity.
Top 5 reasons start-up businesses use accounting software:
1. Save time and money
Accounting software simplifies accounting procedures and automates processes, such as payroll payments, so you no longer need to manually complete them, thus saving time. An example is the simplification of tax filing – accounting solutions let you record income statements, invoices, and receipts in one platform, making it quicker and easier to obtain all the information you need for tax filing in one place.
2. Easily share financial information
Suppose you need to share information with a bookkeeper or accountant; accounting software makes it far more straightforward than before as it collects reports and data for your accountant. Depending on your accounting software platform, you may even be able to give direct access to your financial expert via a separate login.
3. Increased security
A primary benefit of cloud-based accounting software is that all your financial statements are securely kept in the cloud; this is much safer and more secure than being physically kept on shelves in an office, as multiple high-end encryption methods protect them. Furthermore, your data is always in sync, so it’s safer and up to date.
4. Improved accuracy
Accounting systems ensure that your financial data is correctly structured, eliminating common accounting errors. For example, if a newly created journal entry does not balance, the software will immediately warn you and identify possible errors. Accounting software can also automatically perform calculations, such as computing taxes, which minimises the chance of errors from manual calculations.
5. Produce professional-looking financial statements
Accounting software generates financial statements in standardised forms, which you can download and share when requested. Your financial statements will, therefore, be accurate and correctly formatted, lending to improved professionalism and consistency.
How do I choose an accounting software provider?
Each business will have different requirements from an accounting software provider, affecting the key factors a company must consider when choosing one.
While a provider’s price will often be the most significant consideration for businesses, another critical factor should be automation, as this will help save time and resources. It is recommended that business owners research the automation capabilities of each platform to ensure it aligns with their needs, such as invoicing automation and automated financial planning.
It will also be necessary to assess whether you require separate logins for your financial experts and choose a platform that provides this. The availability and standard of customer support should also be considered – the support options available (phone, email, direct message), the turnaround time for resolving issues, reviews, and reputation regarding customer support.
Another important aspect is the usability of a platform, as complex systems that staff may need help to use can lead to increased errors and lessened productivity. Hence, an easy-to-use interface is essential for reaping the benefits of using accounting software.
Ultimately, the best accounting software is unique to each business but typically offers an integrated solution with various automation features that can help streamline your financial operations.
Software providers:
There are many providers available, but the following are industry favourites for start-up businesses:
Xero: a powerful software that offers a wide range of features and benefits to small and medium-sized businesses. Xero’s interface makes it easy to organise financial data and track cash flow. Xero is designed specifically with start-ups in mind.
QuickBooks: a software that is designed for businesses of all sizes. It has multiple automation features which make it easy to stay on top of your organisation’s financial operations, and its interface is simple to navigate and use. Furthermore, QuickBooks is fully customisable, allowing you to adjust it to suit your business needs. QuickBooks also offers a dedicated self-employed plan, complete with all the functions required by someone just starting out.
Freshbooks: a software primarily for small and medium-sized businesses and a cheaper option for those with smaller budgets. Freshbooks has multiple invoicing features and an easy-to-use interface. Freshbooks also has automation capabilities and the ability to accept payments online.
Get in touch
If you need advice for your start-up or small business, get in touch with us on 01792 410100 or by sending us an email.