How to choose the right online accounting software for your business
With the government’s Making Tax Digital initiative approaching fast, many small business owners are starting to think about whether onlineaccounting software could help them manage the transition to dealing with a digital tax system.
But with many different products on the market, how do you decide which one will help you best manage your business finances and put you in the driving seat when digital tax returns come into effect in the coming years?
Here, Emily Coltman, chief accountant at cloud-accounting provider FreeAgent, gives her top tips for how to choose the best online accounting software for your business.
Has it been designed for your type of business?
In years gone by, big software vendors tended to offer multi-layered products filled with complex functionality which business owners would have to navigate in order to find the features that were relevant for them.
These days, the focus has shifted to offering specific solutions that meet customers? requirements.
For example, if you’re a contractor, you may well need a package that can manage IR35, as well asa system to help you fill and file your self-assessment VAT return, on top of helping you with your day-to-day bookkeeping.
But if you’re a larger business dealing with high levels of stock and selling to international customers, youll need software that enables you to manage multi-currency banking, stock control and international VAT.
Remember there is no one size fits all? piece of software out there. Thoroughly check through the specifications of every accounting software package you are considering and see which one is the best fit for your business.
There is no point in paying extra for features or functionality you won’t ever need.
Is it recommended by other small business owners?
Even if the software you’re considering is claiming to be the best fit for your business type, don’t just take its word even the flashiest, most professional-looking package could have serious defects hidden under the gloss.
Do your research and find out what other business owners are saying about the software. Ask your contacts what they use and if they would recommend it, or look for opinions on small business forums or social media.
If a company has some glowing tweets on their homepage, do a deeper search on Twitter to see if the sentiment is shared by other customers.
Also, check whether the vendor you’re looking at mentions their Net Promoter Score (NPS) if they do, and it’s a high value, it’s a good sign it is doing something that its customers like.
Will it save you time and hassle?
Think about your business? current processes. Does it take you a lot of time, for example, to list and sort all your receipts for costs that you pay out of yourpocket? Or to enter your expenses into a spreadsheet, or reconcile your bank transactions?
Is it a hassle to chase up late or non-paying clients, or backing-up data and sending figures over to your accountant?
A good online accounting software package should solve all or at least most of those problems and make your life easier as a result.
If dealing with expenses are a chore, check whether your software has a companion app that allows you to snap photos of expense receipts on your mobile and upload them directly to your accounts.
If late-payers are an issue, look at whether the software lets you set up personalised reminder emails to automatically chase your clients when their invoice is overdue.
Remember too that some online accounting’software will also allow you to complete and file your VAT and self-assessment tax returns directly to HMRC, which could also save you significant time when it comes to your financial admin.
Will you be able to work better with your accountant?
Emily Coltman is chief accountant to FreeAgent, provider of cloud accounting software for freelancers, micro businesses and accountants. She is passionate about helping the owners of small and growing businesses to escape their ?fear of the numbers? and she translates small business finance and tax into practical common sense speak.
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