As your small business grows, your financial data becomes increasingly complex. Managing business accounts in a spreadsheet gets time-consuming, confusing, and susceptible to mistakes. Expanding business creates a need for scalable bookkeeping solutions. To adapt to complex financial data, small business owners must think beyond spreadsheet accounting. The answer lies in bookkeeping software.
This article will explore everything you need to know about bookkeeping software.
What Is Bookkeeping Software?
Bookkeeping software – also known as accounting software – records, processes, and reports business transactions. You can see it as a smart electronic ledger that automates double-entry bookkeeping. Several bookkeeping software can facilitate payroll, billing, tax filing, financial reporting, and accounts payable tasks.
Should You Choose Online or Desktop Bookkeeping Software?
There are essentially two kinds of bookkeeping software. Firstly, there’s the kind you install on your laptop or computer and the kind you use online. Like most software solutions, online bookkeeping software comes with many built-in benefits. Some of these include:
- Data is available online, so you don’t need to back it up.
- You can work on or view your books from any device or location.
- You don’t need to email your ledger to your bookkeeper; you can sign in and access it together.
- Transaction data can enter into the log from other online sources like your bank.
- Real-time reporting facilitates collaboration between your accountant, bookkeeper, and yourself.
Online bookkeeping software even works quite well with other business apps. For instance, you can use third-party POS software at the time of sale, and the date will enter your online accounts.
Things to Consider Before Purchasing Bookkeeping Software
If you are planning to purchase bookkeeping software, here are some factors you need to consider:
1. Pricing Flexibility
What tasks do you need to perform? If you only need to carry out a few basic tasks, then that is all you should pay for. Thus, you must ensure that the bookkeeping software you purchase offers some pricing flexibility.
Will the software work for you a few years down the line? You might eventually want to perform payroll, eCommerce, or inventory functions. Therefore, check if the software gives you room to grow.
You need to keep certain accounting records for years down the line so make sure your software provider can maintain and secure your data for the long haul.
4. Compatibility with Other Business Systems
Can your bookkeeping software work with other business systems such as time-sheeting apps, point-of-sales tools, eCommerce, or inventory control? Will it be able to receive transaction data from your bank and receipt scanners?
Bookkeeping software should make your life easy—review past users’ thoughts about the product to see if it will help you solve your problems.
6. Customer Support
Does the software offer customer support, and when is the support team available? Also, check if you need to pay for support services on top of the software.
7. Expected Return on Investment
Calculate how many hours the software will save you every day, week, month, or year. Good bookkeeping software offers a high return on investment.
Essential Features in a Bookkeeping Software
If you aren’t sure what to look for in your bookkeeping or accounting software, here is a checklist of valuable features to keep in mind.
1. Connections with Your Bank Account
Your bank transactions should flow right into your software.
2. Online Ledger
It is simpler to work with accountants and partners when only one version of the book exists.
Get a visual summary of cash inflows, bills that need to be paid, etc.
4. Mobile Alerts
Get notifications for things such as payments received or overdue invoices.
Send quotations to your customers with an “Accept” button to make things convenient for customers.
6. Online Payments and Invoices
Use online payment options to complete and share invoices.
7. Accounts Receivable
Get alerts when you pay or open your invoice or if they go past the due date.
8. Accounts Payable
Enter your bills into the software.
9. Tax Tools
Use innovative reporting features to speed up the process of tax preparation and filing.
Automatically calculates salaries and deductions and generates pay stubs.
Keeps you updated about the value and volume of inventory and the cost of goods sold.
12. Integration with Other Systems
Check if the software is compatible with other time-saving business and financial applications.
13. Report Generation
The bookkeeping software should be able to produce daily reports used in business, including balance sheets, income statements, payroll summaries, and statements of accounts payable, accounts receivable, and cash flow.
Maintaining accurate and updated records of your financial information is critical for company growth. Nevertheless, to maintain comprehensive accounts, you need a system that overcomes the shortcomings of conventional spreadsheets. Your payments and invoicing are probably the most crucial elements, and bookkeeping software helps to manage them efficiently where spreadsheets fall short.
Handling expense receipts is trouble-free with a bookkeeping application as it reduces paperwork and lowers the risk of data loss because of damaged or missing documents. Spreadsheets also fail short regarding hourly billing – you cannot efficiently log time for project tasks with spreadsheets. Bookkeeping software resolves this problem with timesheets that record the number of hours worked.
Bookkeeping software also helps reconcile bank accounts, manage inventory, and adhere to tax regulations.
Lastly, with bookkeeping software, you can create automatic reports, draw conclusions from report data and drive your business forward.
Bookkeeping is part of your business, and our team at ISA Consortium can help you pick software to help you run your business more efficiently. We work with all the major providers such as Xero, QuickBooks, Sage etc. We also provide full training in-house.
Book your free appointment with ISA Consortium
For more information and professional advice, please get in touch for a free appointment. We will discuss all the needs of you and your business, and head you in the right direction for future business .
All this and more
We offer all the above as part of our full Tax Services and Accounting and can also help you with Capital Gains Tax, Inheritance Tax, Retirement Planning, even filling out your Self-Assessment Tax Returns for you.