Bookkeeping Software- The Value for Businesses - Wright Vigar
 In Advice, Blog

Bookkeeping Software

Handling money and finances can become difficult, time-consuming and sometimes overwhelming for companies. Bookkeeping is a recording process that monitors the financial transactions of a company and is usually the first step of the accounting process. Maintaining accurate and organised bookkeeping is often crucial to a business, especially with the introduction of Making Tax Digital (MTD). Often, manual recording of transactions in cash books or spreadsheets are not now sophisticated enough. However, with the introduction of bookkeeping software, bookkeeping has become more accessible and useful for companies of all sizes and complies with MTD regulations. Here we discuss 11 benefits businesses can gain by using bookkeeping software.

Makes Business Planning Easier

Keeping track of a business’ finances and creating regular reports used to be a time-consuming activity. Accounting software makes this process easier and can provide visual representations of data so that business owners always have a thorough understanding of their Profit and Loss Account, Balance Sheet and Cashflow. This information can be used to forecast and plan ahead.

Helps decisions on Dividends

It is illegal to pay a dividend if a company does not have enough post-tax profit. However, business owners do not need to worry about this, as bookkeeping software provides a clear idea of what profits are available to declare dividends from.

Provides a Clearer Understanding of Tax

Storing business information online can help business owners to estimate tax liabilities. This is invaluable as it helps plan to ensure there are enough funds to make swift payment. Some software provides automatic reminders and overall, relieves pressure on the business owner.

Provides Reporting to Investors

If a company has investors, they may require regular financial reports. In the past, this may have been an expensive process. However, bookkeeping software can provide ready-made reports for them, with minimal effort from the business owner.

This can also be valuable for future investors as well as potential investors will be more likely to invest in a business that has organised financial information.

Helps with VAT

Bookkeeping software can help business owners know when they need to register for VAT. VAT registration is mandatory once a company’s taxable turnover exceeds £85,000 over a rolling 12-month period. Bookkeeping software easily keeps track of turnover, providing a clear view of how close the organisation is to the VAT threshold.

VAT registration and reporting through bookkeeping software is straightforward and minimises the risk of error. The reports are sent directly to HMRC via the software automatically every VAT period, as per MTD requirements.

Automated Processes

One of the greatest benefits of bookkeeping software is the ease of which information can be entered and accessed. Performance results, trends and modelling are all possible, providing the savvy business owner with data to guide strategy.

The software also provides automation which simplifies processes and minimises the risk of human error as well as saving time.

Helps Improve Cash Flow

Regularly recording a business’s turnover, expenses and taxes allows owners to keep track of finances. Financial software makes it easier to monitor the age of customer debts to aid credit control, with the aim of sales invoices being paid in a timely manner. It also helps to ensure that suppliers are paid on time and that a healthy cash flow is maintained.

Focus on Strategy

As bookkeeping software not only provides a clear overview of a business’ financial position, it also saves time. This means that business owners have time to focus on business growth and strategy.

The software can even be used to track key performance indicators to help with strategy and adjustments can be made to help to improve the business’ performance over time.

Keeps Data Secure

It is vital that business data remains secure at all times. Cloud bookkeeping software provides a central location for all financial information. This should also provide you with peace of mind as this keeps data very secure. Using cloud-based software means that your data is backed up and regularly updated to protect from viruses and data breaches.

Payroll Process

Most cloud bookkeeping software enables you to process payroll. It automatically calculates PAYE and NI, as well as reporting to HMRC, providing reports and payslips and updating the accounting software. What can sometimes be an error-prone and messy process, can become an efficient and quick process by using software.

Most payroll software can also deal with pensions, auto-enrollment, and other deductions.

Integration

There is also the capability for some bookkeeping software to be integrated into CRM project management tools and more. This can enable businesses to be more efficient by saving the need for data to be entered into multiple systems.

Bookkeeping software can be greatly beneficial for companies of all sizes. It is important to understand that the software will not be able to do everything on its own. Data will still need to be entered regularly to reflect an accurate picture. However, this is a simple task that requires a smaller amount of work on a regular basis.

If you dedicate yourself to keep everything updated, you will be rewarded with invaluable information about your business’ financial position. If used correctly, bookkeeping software helps create simpler processes which saves you precious time that can be spent on growing your business.

What’s Next?

If you need more information about how your business can benefit from bookkeeping software or to discuss which software would be best, please get in touch. The Wright Vigar team are here to help so call us on 0845 880 5678 or email website@wrightvigar.co.uk

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