The Value of Bookkeeping Software for Small Businesses
If you own a small business or work as a freelancer, having a firm grasp on your finances is important to your success in business.
Bookkeeping software may not be able to make bookkeeping enjoyable, but it can certainly make it a lot less difficult to do.
If you provide your finance and accounting team a bookkeeping software subscription, they will be quite grateful. This is due to the following advantages:
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Transactions are automatically recorded.
A financial transaction, whether credited to or debited from your account, can be automatically entered into bookkeeping software.
Collaboration has improved.
Different departments can interact since bookkeeping software maintains a central database, especially when it comes to providing proof for bill payment, reimbursement claims, and other tasks.
Lower operating costs
Better compliance management
You can reduce operational costs associated with outsourcing bookkeeping services UK by obtaining a bookkeeping software subscription.
Bookkeeping software ensures that all of your transactions are recorded, as well as the necessary tax compliances for both the state and the country.
Financial reports that are easy to understand
The software’s reports highlight data on certain characteristics such as cash flow, balance sheets, and so on.
Invoice processing that is efficient
You can simply produce and exchange invoices, as well as give consumers regular reminders to pay their bills.
The task of bookkeeping is one of those tedious responsibilities that many small business owners would give everything to put off until tomorrow. As we all know, tomorrow never comes, and the task becomes increasingly more tedious as the days pass.
Now that Making Tax Digital (the government’s plan to move tax filing online, starting with VAT reporting) has been implemented, it is a good opportunity to investigate other ways that contemporary accounting and bookkeeping software might assist you in improving the management of your company’s financials.
Consider some of the ways in which complete accounting software and simple bookkeeping software can make your life easier if you’re still on the fence about whether or not to use them.
Clarity and simplicity
When it comes to online bookkeeping or accounting software, the most significant advantage is how simple it is to enter and retrieve information about how your firm is operating. Of course, your software won’t be able to do everything on its own – you’ll need to keep things up to date, and you may need the assistance of an accountant to make sense of the data, make well-informed financial decisions, and stay on top of your financial reporting and statutory filing obligations, to name a few things. Fortunately, this usually only necessitates minor, consistent contributions from you.
For those that are committed to keeping things up to date, they will be rewarded with straightforward, clear, and accurate information on their business finances and tax obligations. After all, bookkeeping software is intended to make the process more straightforward.
Assisting you with VAT documentation and filing
Speaking of which, bookkeeping software may assist you in better understanding when you should begin thinking about registering for VAT – as well as assisting you in determining which VAT scheme is most appropriate for your company.
You are required to register for VAT if your company’s VAT-taxable turnover reaches the current threshold of £85,000 during a 12-month rolling period. You can register for VAT here. In the same way, if you anticipate that the threshold will be exceeded within the following 30 days, you must register. In the absence of a solid method of tracking your turnover, you run the risk of finding yourself on the wrong side of HMRC – and you definitely don’t want to find yourself there!
In order to comply with the criteria of the government’s Making Tax Digital initiative, you must ensure that your accounting software is compatible with the requirements of your VAT registration. The result is that your VAT data are preserved digitally and are automatically transmitted to HMRC on a quarterly basis.
Further Reading: Can you manage your small business accounts for free?
Being acutely aware of one’s tax obligations
You’ll be able to easily calculate your tax responsibilities and the amount of money you’ll need to set aside to pay HMRC if you keep all of your business information organised and accurate online.
The ability to budget with complete certainty is a vital advantage for many small business owners that operate as limited companies. By having a clear understanding of how much Corporation Tax and VAT you’ll be expected to pay for your firm, you’ll be able to plan more effectively. It will also make things much simpler when it comes time to obtain the information you require regarding the pay and dividends provided to you by your employer throughout the tax year in order to include them in your annual Self Assessment.
Find out how much money you can get from your limited company in dividends.
Of course, knowing how much you have to pay in corporate taxes is only half the benefit of knowing how much money you have left over to put in your pocket.
Reconciliation of bank accounts is simple.
In the life of a small business owner, bank reconciliation is a necessary element of the daily routine. It’s a little, straightforward task that can have a significant influence on your records and tax obligations.
To reconcile your bank statements, you must first gather all of your bank transactions and compare them to the expenses you have documented and the sales invoices you have issued. This can be a frustrating job, especially because even a single missing penny can create havoc in the workplace. With the help of online bookkeeping software, the job becomes much, much easier.
Method for Online Bookkeeping
Online bookkeeping is accomplished through the use of software that handles the majority of the computations and data entering for you.
As an added convenience, you can integrate your cloud accounting software with other financial applications that your company utilises, such as your online banking or mobile payment apps. Due to the fact that all of your software is connected through the cloud, any payments that you make or receive can be automatically logged to a digital ledger, saving you time and money. As a result, the software program can perform the computations on your behalf, providing you with an accurate picture of your overall income and expenditure that is updated every time your money changes hands.
When you use an application like this, it becomes much easier to check your records on your laptop or smartphone, even when you are away from the workplace.
Further Reading: Service Description for Bookkeeping