Accounting is perhaps one of the least popular aspects of business ownership (unless accountancy is your line of work, in which case you’ll love it!), often because entrepreneurs perceive the task as complicated and time-consuming.
Accurate accounting is a legal requirement but it’s also essential to ensure you can monitor and manage your business’s cashflow effectively. So if you’re setting up an SME, partnership, or independent business this year, what accountancy choices do you have that will ensure accurate and timely record-keeping that doesn’t affect your focus on growing your business?
DIY accounting is the no-cost option, but you’ll need good organisational abilities and commitment, and be prepared to spend after-hours time keeping your records up to date. Even missing a day or two of bookkeeping can mean errors are made, transactions are lost, and cashflow doesn’t match the data in your accounting software.
If you intend to manage your accounts, you’ll need suitable software, ensure you’re up to date with tax rules and regulations (HMRC offer some useful free training courses), and get to grips with business expenses so you don’t lose out on valuable capital allowances. Bookkeeping, either manual or with accounting software, can be time-consuming, but forms the backbone of an accurate and efficient accounting system. Regular tasks include processing invoices, recording expenses and outgoings, and paying salaries if you have employees.
DIY bookkeeping and accounting is a viable option for some start-up SMEs, but don’t be misled into thinking that it’s an easy option.
An alternative solution is to use a Cloud-based accounting partner, which can offer some important benefits to the new SME:
Working with a Cloud-based accountancy partner can help eliminate many of the monotonous, time-consuming tasks involved in managing your accounts, as well as providing the confidence that experienced professionals are handling your SME’s affairs.
Manual data input is notoriously prone to human error, so opting for Cloud software that uses cutting-edge AI or OCR technology can improve the accuracy of your accounts, reducing time spent cross-checking information.
Unlike traditional accounting, which relies on local storage of financial data on a hard drive or server, Cloud-based services give real-time access to data from any location or device, at any time. For SME owners who are always on-the-go, this can be hugely advantageous, as crucial business decisions can be made in a timely, informed manner.
If you choose to manage your accounts, you’ll need a crash course in cybersecurity and advanced tools to protect your business from criminals. With Cloud-based services, sensitive data is secure and automatically backed up to a watertight location, making unauthorised access challenging.
Cloud accounting platforms such as Xero enable you to scale up your accounting system as your SME expands, with over 800 add-ons that can tailor the software to your specific business; not just now, but in the future too.
We have written an in-depth guide to assist start-up businesses. This gives useful information about trading as a Company or a sole trader, explanation of taxes and other matters to consider, as well as lots of very useful links. The guide can be downloaded for free, just click here.
At David Howard, our specialists can support your SME with an extensive range of accounting and financial planning tools, including Cloud-based software such as Xero. For more information, get in touch today.
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