Tips for start-ups: Accountancy software
Accountancy & Tax Accounting and payroll are not, admittedly, the most exciting parts of a business. They are, unfortunately, absolutely critical to its success.
■ Question: Do some start-ups delay tackling the accounting and payroll side of their businesses?
■ Answer: Yes, because it’s seen as complicated and/or dull. Yet good financial management is crucial for any business — and software is available to make it easier to crunch the numbers.
When you get into the dense and dry business of VAT returns, PAYE and National Insurance calculations, it’s no wonder some business owners bury their heads in the sand and tell themselves that they’ll worry about number-crunching later.
That way, however, lies a whole heap of trouble. “There’s a lot of pressure for businesses to get their accounts right, both from banks and from the Inland Revenue,” says Chris Rodger from Whitakers Chartered Accountants in Cornwall. “Take the requirements to submit your VAT returns on time or face a fine, for example.”
Essential software for new businesses
Accounting and payroll software is available to take the sting out of balancing your books and paying your staff, so it’s important to choose it wisely. Accountancy software can even help you handle those dreaded VAT returns — assuming you are putting the right information into it. “To be able to press a button and have a look at your return, then press another button and transmit it to Revenue and Customs… well, that’s priceless,” says Chris.
Good accountancy software doesn’t have to be bespoke to your business. It should, however, incorporate a good cashbook, a purchase ledger, a sales ledger, have a forecasting facility and — most importantly — the ability to print out a profit and loss account and balance sheet whenever it’s needed, not just at year end.
"If a software package is simple, a lot of our clients think it's fun to use"
The necessary tools for entrepreneurs
You don’t need to be a financial expert to use such packages, but, says Chris, a basic knowledge of accounts is helpful. “If a software package is simple, a lot of our clients think it’s fun to use. If it’s too complex, however, it can become a drudge.” When it comes to paying staff, integrated accounts and payroll packages can be useful.
“It’s increasingly difficult to work out payroll manually,” says Chris, “because you have to take into account statutory sick pay and statutory maternity pay and the like. In most cases, payroll software is on a subscription basis: it’s constantly updated through the Internet. That’s handy because the allowances and tax rates change regularly.”