Until fairly recently, accountancy software came in a box and was something you had to install on your computer yourself to get started. Today, thanks to cloud computing, you have a host of web-based accounting solutions to choose from that are easier to use and have a wide range of features to help with all your book-keeping and accounting.
You may find that your accountant supports one, or several of the leading accountancy software brands. In fact, more and more use third party software across the board. It may be included in your monthly fee, or charged as an ‘extra’.
If your accountant doesn’t provide software, you will find numerous benefits from managing your accounts online and signing up yourself. Here are some important things to look out for when choosing accountancy software for your company.
Start by considering what are the essential accounting features you need. Basics include being able to raise invoices, update your accounts, analyse profits and cash flow, and quickly identify outstanding debtors and creditors. But there are other features that may be important to your business.
What reporting features do you need?
If you want detailed monthly reports to analyse how you’re doing, look for accounting software that produces monthly profit and loss accounts with comparisons for the previous 12 months. Other useful reporting features include monthly balance sheet reports detailing assets, liabilities and capital balance; reports of your main clients and/or suppliers in the past 12 months; debtors and creditors for periods of 30, 60, and 90 days, and an estimate of tax liability for the current financial year.
One time-saving feature to check for is a banking module. This means the software can link to your bank account and detail banking transactions automatically, instead of you having to upload statements. Not only will this save you time, it also means your figures will always be up to date. There are systems that will take details of your salary and any dividend payments you receive and link these to your personal tax return. Some, such as FreeAgent, will even file your tax return form with the software.
Is a VAT module included?
Most limited company contractors are VAT-registered. VAT-related features to look out for include:
- Software that can cope with cash and invoice accounting for VAT.
- A system that automatically produces a VAT return.
- A system that facilitates the flat-rate VAT scheme.
- Software enabled to allow you to submit a VAT return directly to HMRC.
What else do you need?
Not all software packages include a payroll module but if you employ a number of staff, for example, this is definitely a feature worth having. In addition, check whether the module facilitates real-time information (RTI) submissions to HMRC as this can make PAYE a lot more efficient.
If you have clients or customers abroad, make sure your accountancy software can handle multi-currency accounting. And if you’re on the move a lot, you also want to be sure you can access your accounts through your smartphone. Most software packages are mobile enabled but some still have fairly limited functionality.
How much support is available?
No matter how comfortable you are using accountancy software, you are likely to run into problems at some stage. It’s important to know there is a good level of support available. Before you buy, check what built-in help is included with the software and what back-up is available via web chat, email or over the phone. If your accountant provides the software as part of their monthly fee, they will typically be the first point of contact if you have any problems.
Try before you buy
The above list of questions is not exhaustive and there’s no substitute for hands-on experience. Fortunately, many of the top systems offer a free trial, giving you a chance to see which accountancy software is the right fit for your company.
Popular systems such as Xero, ClearBooks and FreeAgent offer free trials of up to 30 days, which should be long enough to give you a feel for the product. FreeAgent, in particular, is now very widely used by numerous firms of contractor accountants.
As already mentioned, most charge a set monthly fee for supplying the accountancy software and many have introductory offers for limited companies or a fixed priced for the first six months. It’s definitely worth shopping around to find the best deal, although the cheapest option isn’t always the best. If anything, it’s better to go for a system that offers more features than you need, rather than having to buy add-ons or change your system at a later stage as your business grows.