Using Accountancy Software in Your Businesses
Accounting is perhaps one of those areas of business about which people tend to be less than enthusiastic. Perhaps the idea of breaking out of the humdrum office existence and forging an entrepreneurial career, or perhaps working from home or buying into a franchise opportunity all sound fantastic, but when reality kicks in and the tax man comes knocking, accounts have to be in first class shape.
Often, to begin with, this isn’t too difficult, with either hand written ledgers or perhaps a simple, basic spreadsheet set up to take care of the basic incomes and expenditures. But gradually, little by little as time passes by and your business continues to expand and your workload becomes increasingly important, the accounts can become patchy, with errors, omissions and issues occurring that can be hard to consolidate with the figures represented by the bank balance.
It’s often all plain sailing until things start to go wrong, or the smooth running of the business starts to crumble a little. Perhaps you take on someone to help out, and have to alter your accountancy methods to take in to account the money paid to them. On the other hand, perhaps you needed some more equipment and had to take out a loan, and now have to manage regular payments out as well as those coming in. Perhaps even one of your clients or customers hasn’t paid, and money you were expecting isn’t forthcoming and you now need to start working out creditor costs.
These are just some of the issues which can easily come into play when a home business or small business starts up, and there seem to be three possible solutions. The first is simply to continue with handwritten account information, or to use a home built spreadsheet. Clearly, these two options are only viable if the business is one which is run only by you, and has a very small turnover, with basic incomes and expenditures, regular contracts and no complications or problems to calculate in.
However, anything more complex than this arrangement and you will be looking at one of two other possible options – either pay for the services of a qualified accountant to regularly check over your business accounts, bank statements, receipts, invoices and bills, or bite the financial bullet and purchase some accountancy software yourself.
For many people the idea of turning to a software solution, learning how to use new, perhaps complex software and trusting all their business accounts to a computer, might seem rather worrying at first, and so they prefer to opt for the seemingly safer alternative of a real live human being.
The trouble is that a real live human being, whilst reliable, is also very expensive, and this can be difficult for a small business or a home business that doesn’t have a huge turnover. Certainly as far as cost effectiveness is concerned, using accountancy software is one of the best options you can go for. However, how complicated is accountancy software really these days, and how hard is it to learn? You might also be curious as to how expensive the software is, and how stable and well supported it is once you have bought into the solution.
The truth of the matter is that although many accountancy software solutions provide a wealth of tools and facilities, these may not necessarily be needed for many home businesses or small businesses. The only aspects of the software you will need are those which you’re already managing in various ways. You will clearly need to track your bank accounts, with incomes and payments. You do this already, probably by printing out your bank statement and scribbling in the margin. Accounts software can often allow you to import data in from your online account statement.
You will also probably have a list of clients or customers – possibly in a database, a spreadsheet or a notebook, along with invoices generated or delivered. Again, software can allow you to manage this much more effectively, cross checking the invoices with your bank records to check that money really has been paid in full and received.
Clearly, you will need to be able to track expenses, although too often home business users don’t keep records of these. Not keeping such records can make it very difficult to prove your earnings and expenses when the tax man comes to call, so having one central repository where your receipts and costs can easily be entered makes it much easier to see at a glance where the money is coming in and where it is going out. This in turn allows you to analyze the efficiency of the business, identify patterns or trends, and even make forecasts as far as estimated earnings over the next few months or year is concerned.
There are actually a large number of free accountancy software products available, including Microsoft’s own version which is fully compatible with their office suite of software. Many others provide 30-day trials, and cost no more than an office chair or a meal out. You’ll almost certainly already understand most of the features and options, such as invoices, bank statements, balances, expenses and so forth, and by keeping these up to date, you’ll be able to gradually pick up an understanding of the other features which allow you to use those centralized cross checked figures in ways that no notepad or cardboard box stuffed full of paper could ever hope to achieve.
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