Updated: Jan 27, 2019
This week I've launched a Facebook group to help startup business owners with their bookkeeping, it seemed like the sensible thing to do to share lots of knowledge in one place. I've asked members to let me know the biggest question they have about bookkeeping for their businesses and one of the first questions I was asked is "Should I pay for accounting software?" It's really topical as I've been doing accounting system set ups for clients all week, so I thought it would be a good question to answer in a quick blog post.
To give you some background on what my accounting system set ups involve, clients often come to me with boxes of receipts because they haven't had time to do their bookkeeping, they don't know where to start or they just haven't quite found a system which works for them. I help them to get everything in order and recorded in an accounting system with some guidance on how to stay on top of things so they can understand their businesses better, feel better about their accounts and have those important figures to do their tax returns.
My preferred software
I tend to set clients up with QuickBooks Essentials, it's the middle tier QuickBooks accounting package and is suitable for most business types. Sometimes it's better to set clients up with QuickBooks Self Employed which although cheaper and with some clever features like giving you a view of your tax liability as you go through the year, is much more limited in its features.
What does it cost?
QuickBooks Self Employed costs just £7.20 per month and Essentials costs £18 at the time of writing, both of these prices include VAT and there's usually an introductory discount. I include an accounting package with my accounting system set up for the first three months for free, but people aren't always convinced about paying out for accounting software. I get it, when you're paying for a number of other pieces of software, apps and subscriptions for your business, it all starts to add up and it might not seem sensible to pay for accounting software when you might be able to get away with keeping things in a spreadsheet for free. So, should you pay for accounting software?
The most useful features of software in my view
In my experience, once I've cleared that backlog of paperwork for my clients and they have an accounting system in place and a little bit of training, they find their accounts much more straightforward to stay on top of. I recently wrote about five reasons why you need an accounting system if you'd like to know a little bit more, but for now, these are the top three features that clients find particularly useful.
A direct feed of transactions from your bank account
You can connect your bank account to most accounting software which means your transactions are pulled in directly from your bank statement. It's the perfect way to ensure you don't forget to record any of your transactions and it takes just a couple of clicks to record income and expenditure in your accounts. Even if you've lost a receipt, seeing the transaction there on your bank statement means you're more likely to be able to include it as an expense than if you'd forgotten all about that transaction.
Staying on top of invoicing
Most software will allow you to set up and email an invoice to your clients from your computer or an app, and because your software has sight of your bank statement too, it's easy to match income against those invoices. The wonderful thing about this is that you can keep track of which customers have and haven't paid you by running a simple report. If you've ever raised invoices using a word document template and have to check your bank statement every now and again to see who has and hasn't paid you, you'll find this a huge time saver, particularly if you raise many invoices every month.
Having a good idea of what your tax bill will be
And if you're self employed and using QuickBooks Self Employed or FreeAgent's Self Employed software if you'd like a comparative, you'll have a view of your tax bill as you go through the year which is incredibly helpful for budgeting for your tax bill.
For me it's about time saved and peace of mind
For me, accounting software is a must, I'll almost never recommend somebody carries on with a spreadsheet based system. There is usually a small cost involved but once you know how the system works and get into a routine you'll see that there is a huge cost saving of your time every month as you tackle your bookkeeping in the future. If nothing else, you won't find yourself returning to bag of receipts accounting method that some of us are so familiar with. And what's great is most software has a free trial, QuickBooks for example offer 30 days free at the moment.
I think if you're still undecided, taking a free trial is the way to go, you just don't know what you're missing until you give it a try.