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Tuesday 1st May 2018 at 08:24 By Rob |
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We believe that computers should make our lives easier! With that in mind today we're looking at why we believe EVERY business should use accounting software to save them time, save them money, and generally make their lives more hassle free.
Many of our clients are small to medium sized businesses, and don't necessarily understand what accounting software is, and perhaps even what the difference between a bookkeeper and accountant is, so this article aims to explain everything in plain English, and why we believe you should be using accounting software with your website if you sell online.
I've broken it down into 7 easy to digest sections:-
1) Accounting basics and jargon explained
2) What is accounting software, and what does it do?
3) Most common accounting software
4) Why you should use accounting software
5) The "old skool" alternatives to accounting software
6) Why you should integrate your website with accounting software
7) How we can help
A quick disclaimer
Please note that we are a web design company, and not accountants so our advice here is from our own experience in integrating websites with accounting software to save clients time and money. We are not able to provide accounting advice.
All prices are correct at the time of writing.
As many readers may be new to running a business, or using accounting software, here is some basic "jargon" and accounting basics.
Every year every company has to produce a set of "accounts", which show everything they've sold, and everything they've purchased.
If you're a limited (Ltd) company you'll produce annual accounts, on top of your personal tax return.
If you're a sole trader, then your accounts will be combined with your personal tax return.
Accounts are usually prepared by a bookkeeper, and signed off by an accountant (see definitions below).
| Role | What they do, in plain English |
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Bookkeeper |
A bookkeeper is someone who collects all the receipts for everything you've purchased, and ensures you have invoices for everything you've sold, so you have totals for how much money you've taken (income / turnover), how much you've spent, and what your profit is. The result is known as "P&L" (profit and loss). A good bookkeeper would usually do this monthly or weekly, so you know exactly where you're at financially. They essentially do the hard work to prepare everything for the accountant. Sometimes small business owners do their own bookkeeping, and provide it to their accountant. |
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Accountant |
An accountant is usually someone who looks at all the work your bookkeeper has done, makes sure it is correct, and advises you on being tax efficient, and ensures you're complying with the law. They will prepare everything that is sent off to HMRC and Companies House. Sometimes your bookkeeper and accountant will be one and the same person. |
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HMRC |
HMRC stands for Her Majesties Revenue & Customs, previously/also known as the "Inland Revenue". These are the people who collect your tax. |
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Companies House |
If you're a registered company, eg an Ltd company, then it is Companies House who you will be registered with. It's not necessary to be a registered company to run your own business however, as you can operate as a sole trader. |
Accounting software usually does the following:-
Accounting software is usually used by:-
Below are the three most common accounting software packages we encounter.
We can't advise on which is the "best" accounting software to use, as it all depends which is best for your business. Often you'll find that your accountant is more familiar with one accounting software than another, so may prefer that you use particular software as it's what they know.
Our personal favourite is Xero, but that's not to say it's right for everyone.
| Software | Summary |
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Xero From £10/month |
Our personal favourite. Why? Because we find that it's the easiest to use; and we believe in easy! Xero is cloud / web based, so to get into it all you need is a computer connected to the internet. It's very easy to use, and is improving all the time. It also has lots of automated features to automate tasks such as bank reconciliation and VAT returns. |
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Sage From £6/month |
Founded in 1981, this is probably one of the oldest accounting software systems on the market. Whilst Sage has developed some newer versions of their software which you can access via the web, Sage usually requires a PC (not Mac) and for the software to be installed on your computer, and requires more traditional "networking" to be accessed on more than one computer. Sage now have a range of solutions now that include a cloud (web) based solution "Sage Business Cloud Accounting" which you can access from anywhere with a web browser, just like with Xero. However, it is very basic and not a patch on Xero. Sage is very powerful however, and probably has the most sophisticated range of features compared to some of the other platforms. It's not the easiest to use though; so people who are technophones might not get on too well with it. |
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Quickbooks From £6/month |
QuickBooks is geared mainly toward small and medium-sized businesses. Like Sage, traditionally their software was PC and application based, so couldn't be accessed from the web. They do however now have QuickBooks Online (QBO) which is cloud/web based like Xero. |
Here are the "old skool" alternatives to using accounting software.
| Alternative | Why it sucks |
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Paper records |
You can't automatically work out totals, like you can do with a computer. It's much more time consuming. If you have a fire, record are easily lost. It's generally inefficient. It will cost you more money in accountancy fees, as a bookkeeper and/or accountant will have to go through all your paper records so that they can do their jobs. |
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Spreadsheets |
A spreadsheet can't do the automation such as bank reconciliation, VAT returns, etc that many accounting software systems can do. As with paper records, it may cost you more money on accountancy fees as your accountant will most likely need to input the information into the accounting software they use so they can do their jobs. |
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Doing nothing |
Well, as you legally have to report on your accounts, doing nothing simply isn't an option! |
What we mean by "integration" is simply linking your website to your accounting software.
The two most common aims of integration are:-
1) Save time as integration automates boring tasks such as invoicing creation for you
2) Save money on bookkeeping/accountancy fees as integration automates a lot of the work
3) Have a clearer view on your financial picture because integration means you can always be up to date with your invoicing and stock information, rather than only being up to date once a month once your bookkeeper has created all your invoices manually
Our ecommerce websites can integrate with Xero and Sage, and we may also be able to integrate with Quickbooks.
We believe in making life easier... we believe that computers are here to do hard work for us!
So not only do our beautiful websites help you sell online with ease, but our integrations with the likes of Xero and Sage can save you time and money too.
If you're an existing client, and are interested in integrating your online shop with accounting software, please don't hesitate to contact us.
If you're not currently a client and would like to see how we can help you sell online easily, then get in touch! We look forward to hearing from you.
We can help you sell online easily too!
We have been helping antiques, vintage and art dealers sell online easily since 2004, and we can help you too.
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