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How to choose the right computer equipment for your business to increase your productivity and efficiency without it costing the earth.

Business software helps you complete a range of tasks. Choose the right software, provide support and train your staff with our introduction.

It is highly likely that you depend on the internet for some aspects of your business. Find out how you can use the internet more effectively.

Good communication with customers, partners and suppliers is vital for business success. This summary explores business communication methods.

How would you cope if your IT system failed or was breached? We cover the main IT security issues and how to protect against them.

Good IT management can help you choose, use and implement IT. Our overview helps you manage IT in a way that maximises the return on your investment.

IT support is vital if you rely on your IT system. But how can you set up an effective safety net in case things go wrong? We explore the options.

Getting the right IT is just the first step. Appropriate training, policies and working practices can help you maximise return on your IT investment.

Essential guide to choosing accounting software

The right accounting software can save you and your business time and money. Integrated accounting packages enable you to keep track of your invoices, accounts and expenses from your computer, tablet or mobile phone.

Modern business accounting software is simple and straightforward to use and designed for people who are not accountants. There are systems that suit businesses of all sizes, from sole traders and small start-ups to larger companies with many employees in multiple locations.

Why use accounting software?

Identify your needs

Ease of use

The options and costs

Buying accounting software

1. Why use accounting software?

Basic accounting software is packed full of useful features and functions that can improve how your business operates.

Accounting software makes routine tasks easier

  • Book-keeping is simplified and automated. For example, when you enter an order, the software will update your stock levels and customer records. You can also translate the order into a sales invoice automatically.
  • You can keep track of invoices, quickly identify unpaid invoices that are overdue, and send out reminders encouraging customers to pay.
  • Most software packages enable you to link your business bank account. Details of all transactions can be automatically imported, reducing data entry errors and making reconciliation simpler.
  • You can use accounting packages to help you complete VAT and tax returns.

Accounting software provides a range of real-time management reports

  • Generate your balance sheet, profit and loss or cash flow reports, or view performance against budget.
  • Manage cash flow. Check account balances and forecast your future cash position. Monitor overdue payments and overall levels of outstanding payments due from customers and to suppliers.
  • Automatically produce other key information. For example, tracking profit margins and sales growth, or identifying your most profitable customers.

Accounting software makes it easy to prepare for your annual accounts or for an audit

  • The software should make it easy to share data with your accountant.
  • It is easy to check your financial records to see where the figures come from.
  • Many packages offer additional functionality. For example, you might be able to estimate the profitability of a potential contract and produce a quote.
  • Related functions – such as running payroll or managing stock levels – are often available as extra cost options.

2. Identify your needs

Before comparing accountancy software packages, spend some time considering how you will use the software and the functions that you need. Being clear about your priorities can help you to evaluate packages, and identify the best product.

What are your business objectives?

  • For example, you may aim to capture 10% of a given market within five years, or want to open ten new shops.
  • What features will you want your accounting software to include to help you achieve these objectives?

Who is going to use the software?

  • Anyone using the system should be involved in deciding what software to purchase.
  • What would your employees like to see from a new accounting system? What issues are there with your current software or approach?
  • Involve your accountant. It's important that they can work with the software to produce your end-of-year accounts and to satisfy audit requirements. They may prefer working with a particular system, or be able to give you advice on making a purchase.

What management information is crucial to the running of your business?

  • Easy access to key management information can give you – and advisers like your accountant or a consultant – the data you need to improve you company and accelerate growth.
  • What types of information are most important for your business? For example, as a retailer you may need instant access to stock information.

What book-keeping and financial management tasks do you need to perform?

Your requirements could include:

  • basic book-keeping
  • cash flow management and budgeting
  • management reports and up-to-date key information
  • completing and filing VAT and tax returns
  • stock control
  • managing payroll, PAYE and employee expenses
  • project management

What special needs do you have?

  • For example, do you operate more than one business, or trade internationally? If you buy and sell in different countries, you need software than can manage multiple currencies.
  • If you run an online business, can the software integrate with your ecommerce solution?
  • Do you want your accounting systems to link with other systems you use, such as your customer relationship management (CRM) system?

Compliance

Accounting systems sit at the heart of your business. While the software should be simple and easy to use, it must deliver a high level of compliance. Here are some things to consider:

Check that the software provides an audit trail

  • You must be able to track all transactions that occurred during the year. For example, the software should allow you to delete an incorrect entry, but should also record what was deleted, so you can check it again if necessary.
  • The software should conform to good accounting practices. For example, an invoice should remain open in the next accounting period if you have only received part payments.

Check how the software manages back-ups

  • The software should ensure that you are always using the most up-to-date information.
  • You should be able to keep records as long as required. For example, most account information needs to be kept for six years and most payroll information for three years.

3. Ease of use

The software you choose must be intuitive and easy to use. When weighing up your options, here are some things to consider:

How simple a solution are you looking for?

  • Ease of use is likely to be a priority for a sole trader or a small business. Larger companies with experienced book-keeping employees may want more sophisticated solutions.

How easy will it be to get started with the software?

  • How complicated is it to set up the software? What do you need to do to install and configure it?
  • What other systems or software do you want to link to, and how complicated is this?
  • Can you automatically import your existing book-keeping records, for example from a spreadsheet or another accounting package?
  • Are the people who will be using it already familiar with the software or a similar package?

How easy will it be to use the software?

  • Can you simplify or automate routine tasks? For example, putting your logo and contact details on invoices.
  • Can you add (or link to) detailed information on your customers and suppliers?
  • Can you customise accounts and management reports to match your particular requirements?
  • Is the system easy to access and use wherever you are, making it easy to check information and add data (eg expenses while travelling)?
  • Can you connect your business bank account to automatically import transactions and make reconciliation easier?
  • Is it easy to share data with your accountant, or for your accountant to directly access your book-keeping records?

Will you be locked in?

  • Do you purchase the software outright or pay a monthly subscription? Will you need any support or maintenance contracts? Can you cancel at will or is notice required?
  • Will you be able to freely export all the data to another package in future, should you need to?

4. The options and costs

Smaller businesses generally prefer online accounting solutions

  • The software is provided as an online service, with your data stored and processed 'in the cloud'. You can sign in and use the service from anywhere.
  • You pay a monthly subscription, which depends on the number of users, the volume of transactions and which features you want. Monthly charges are typically £10-£30, with additional costs for extras like payroll.
  • There are no upfront charges, and the software provider takes care of updates and technical support.
  • As your company’s financial data is outside your business, you will want to be sure you are dealing with a provider that encrypts and protects your data. You should also keep your own backups in case something goes wrong.
  • Popular packages include QuickBooks, Xero, Sage and FreeAgent.

Apps with built-in banking and accounting features are becoming more popular

  • Apps are designed to be very easy to use, linking together banking, payments and basic accounting.
  • Apps tend to have relatively limited functionality compared to more traditional accounting software packages.
  • This sort of solution can be particularly appealing to sole traders and small businesses with relatively simple book-keeping needs.
  • Well-known apps include Coconut, Countingup and the Tide business bank account.
  • Monthly charges are typically £0-£50, depending on the volume of transactions.

Desktop and server-based packages offer greater control, but take more time and knowledge to set up

  • Desktop accounting software is installed on your computer. In general, you can only use it on that computer and all your data is stored there.
  • The popularity of desktop software has fallen since cloud accounting software became commonplace. However, using it does mean that all accounting data is kept within your business.
  • Server-based software runs on a central server in your business. This means it can be accessed by several people at once. It is often used by larger companies that have the resources to set up and manage the software.
  • Even relatively large businesses now often use cloud-based solutions like Sage Intacct.

Accounting software is often available with add-ons or modules

  • Software providers often offer modules for related functions such as payroll.
  • Leading providers typically offer ‘app stores’ or marketplaces to make it easy to link to other business software, from other companies. For example, linking your accounting software with ecommerce and payments providers.

People in your business will need training to use the software

  • The person responsible for managing your accounts will need a detailed understanding of the system.
  • Employees responsible for specific functions must be able to perform those tasks. For example, a sales person must know how to raise an invoice.
  • Thorough training can be costly, but is often less expensive than learning by trial and error.

5. Buying accounting software

Before purchasing your software, we recommend that you get some impartial and independent advice from an expert. Find someone who understands the needs of your business and the capabilities of different software packages.

Most accountants can advise businesses on what software to choose

  • Some accountants are more experienced than others in using different platforms.
  • Good accounting software can reduce reliance on your accountant, so they may have a vested interest when recommending certain accounting software packages.
  • Additionally, they may prefer you to use software that makes their life easier. But you need software that's right for your company.

Some accountants are software resellers

  • Larger accountancy firms may have a dedicated accounting software department.
  • Again, they may have a vested interest in selling certain software. Seek independent advice if you're unsure.
  • Many resellers are also software developers. They can customise software to meet your exact needs. But for smaller businesses, the costs of having a system customised will usually outweigh the benefits.
  • It's often possible to customise cloud accounting software yourself, by picking the add-ons that best suit your business.

Be wary of software that is new or only has a small user base

  • A large user base removes a significant element of risk. It usually indicates an established product with better support and more investment in upgraded versions of the software.

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