Using Software Improves Accuracy
Bookkeeping Software is More Accurate
When you use software to do your bookkeeping (keep your financial information) this is more accurate than keeping this on Microsoft Excel or similar programmes.
The problem with Excel is that the formulas can be come out of sync therefore where you are relying on the calculation it may not include all the figures an example is a VAT return it may not include all the figures making you underpay or overpay your VAT.
Each Tab you run in Excel with need you to keep checking the calculation to ensure it is correct and linking any cells that may have brought forward figure on them.
Not always is it as simple as copying and pasting the previous months sheets across without check the formulas.
Software
Using software for instance will let you create sales invoices on them, once this is set up on software you can raise the sales invoice and email this direct from the software to the customer so you know it got received and may get paid quicker.
Using software can also save your time if you enter your purchase and sales invoices daily/weekly you will not have to spend the same amount of time preparing your VAT return as if you would in one go.
Some businesses do not prepare their bookkeeping until the last week before the VAT return is due.
Reporting Functions
The software will have reports that it can produce like profit & loss, so you know what profit you are making, debtors and creditor report so you know who owes you money and who you owe.
Once someone pays you and it is recorded in the software your debtors report is automatically updated.
Bank Feeds
Most banks will have the facility to allow bank feeds to be automatically import the bank transactions for the day.
The software will then automatically suggest payment/receipt that it thinks may be related to this transaction, but this will only happen if it matches the exact amount, if it a penny out it will not suggest this.
This makes reconciling your bank account an easier experience compared to manually reconciling this.
Bolt on Software
Some bookkeeping software links with software that make your day to day tasks or reports all synchronized together such as:
Date caption software, where you take a photo on your smart phone and upload this to the software
Cashflow forecast where this work out what cash you have coming in and out over the next 30 to 90 days very important for business survival.
Please beware that this an additional purchase but it will save you time leaving you free to run your own business.
Payroll
Some of the bookkeeping software vendors offer payroll software (an extra purchase) so once you have run this the payroll each month this will automatically make the transactions in the bookkeeping software so there will be less chance of error compared to entering this manually.
VAT Returns
Once you have all the transactions in the software this can be submitted by the software and a submission receipt will be emailed to you, so you know it has been received.
You must use software to submit your VAT return to HM Revenue & Customs since Making Tax Digital was introduced for VAT.
When Making Tax Digital for Income Tax (MTD for ITSA) come mandatory you will already have this in place, and it will also be coming if you run a partnerships or limited company and the software runs across all platforms which ever way you decide to run your business.
If you need help or want more information on which software suits your business, please contact us:
Call 07795 425032