What’s the Best Accounting Software for Small Business?

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What’s the Best Accounting Software for Small Business?

When you run a small business, accounting software can be your best friend. Here’s a look at why you’d need it and which features you should look out for when choosing one. We’ll also give you a rundown of some of the best-rated accounting software packages for small businesses in the UK.

Why do I need accounting software for my small business?

Well, strictly speaking, you don’t have to have accounting software. HMRC’s rules require you to keep a record of all your business transactions — both income and expenses. But the rules don’t specify which format these records should take, as long as they’re complete, accurate and readable.

You could do your accounts on an Excel spreadsheet and HMRC wouldn’t bat an eyelid – as long as they’re complete, accurate and readable, of course. You could even buy a physical ledger book and write in all your transactions by hand.

But, ask yourself:

  • Can you afford to set aside at least several days each month to do your books manually?
  • Do you know enough about accounting to get everything right?
  • And, most importantly, are you 100 percent certain you have enough virtual or physical space to store your records safely and securely? Those ledger books take a lot of room, you know.

HMRC can slap you with penalties and interest if there are mistakes in your accounts. And if your business records are lost, stolen or destroyed, you’ll need to do your best to recreate them.

Is it worth taking these risks when there’s a better way?

What are the advantages of using accounting software for my small business?

Put simply, accounting software can save you time, money and trouble. Here are some of the key advantages:

  • There’s no need to input each transaction individually by hand. You can upload a bank statement (or connect your bank account to the software), and all your account activity will appear in minutes.
  • Most mathematical calculations happen automatically in the background, which keeps the risk of human error to a minimum.
  • Accounting software keeps all your financial records — transactions, invoices and receipts — together in one place. This single source means it’s easier to access everything at a moment’s notice should you need to. It’s also easier to collaborate with your accountant. Merely give them access to the software, and they’ll have all the information they need to do your accounts and file your self-assessment tax return.
  • All your data is backed up to the cloud, so you don’t have to worry about making manual backups. Or having enough room for storage.

As a bonus, many accounting software packages automatically create all sorts of interesting and useful reports in real time, such as your:

  • Profit and loss account
  • Balance sheet
  • Income by customer
  • Expense by vendor

The reporting feature means you don’t need to guess — or carry out lengthy calculations — if you want to find out how well your business is doing.

What should I look out for when choosing accounting software?

There are lots of accounting software packages out there. And all have their pros and cons. So how do you decide which one’s right for you?

Here are a few things you should consider:

The costs

Many accounting software packages charge a fee. This fee is tax-deductible because you use the accounting software for business purposes.

Nevertheless, a cost is still a cost. It’s important to make sure you don’t spend more than you can afford, especially if you’re starting out and money’s tight.

You may be able to keep costs down by:

  • Opting for a basic package instead of the premium tier.
  • Paying for a full year upfront instead of month-to-month, as the price may be discounted.
  • Choosing accounting software that has a referral program. This way, you’ll get money off when someone signs up on your recommendation.
  • Considering a free accounting package. However, do beware. Free software usually comes with trade-offs.

Features

It’s a good idea to carry out a needs analysis before you start looking at accounting software. By focusing on what you need, you’ll narrow down your choices and also keep costs in check.

To conduct a needs analysis, ask yourself:

  • What sort of transactions do you carry out most often? For example, do you process a lot of credit card payments? You’ll need accounting software that can handle these effectively.
  • What else do you need your accounting software to do, aside from basic accounting? Is there a particular feature, such as payroll, that is mandatory?
  • Do you need the software to integrate with other applications you use in your business, such as a POS system or MileIQ?
  • How many people will need access to the software?

Ease of use

One of the biggest advantages of using accounting software is that it can make your life easier. So, you should choose a program you can get to grips with quickly without too much of a learning curve.

Most modern accounting software programs are relatively easy to learn and get running. That said, it doesn’t hurt to make sure. If available, sign up for a free trial and take the software out for a spin before you commit.

Ratings and reviews

Reading reviews from independent reviewers and other users can give you a better idea of how well the software fares in the real world. In particular, watch out for what people are saying about the quality of customer support.

Some useful websites to check out for independent reviews and advice include PCMag and Trustpilot.

Andre Spiteri

André Spiteri is an expert fintech copywriter with a passion for making personal finance simple and accessible to everyone. Formerly a financial lawyer, he now helps fintech businesses establish their authority online and make more sales through the power of words. Head over to MaverickWords.com to learn more.

MileIQ’s blog does not constitute professional tax advice. You should contact your own tax professional to discuss your situation.

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