1. Why use accounting software?

Basic accounting software is packed with useful features that can improve how your UK business runs.

1. Accounting software makes life easier.
2. Accounting is simplified and automated. For example, when you place an order, the software updates inventory levels and customer information. Orders can also be automatically converted to sales invoices.
3. Track invoices, quickly identify unpaid or overdue invoices, and send reminders to customers to pay.
4. Most software packages allow you to link your business bank account. All transaction details can be automatically imported, reducing data entry errors and simplifying reconciliation.
5. Fiscal packages help prepare VAT and tax returns. Accounting software provides various real-time management reports.
6. Create balance sheets, profit, and loss, or cash flow reports and compare actuals to budgets.
7. Manage cash flow. Check account balances and predict future cash balances. Monitor overdue payments and outstanding totals from your customers and suppliers.
8. Automatically generate other important information. For example, you can track profit margins and sales growth or identify your most profitable customers.
9. Accounting software makes preparing annual financial statements and audits easier.
10. Software should facilitate data sharing with accountants.
11. It’s easy to check financial records to verify the origin of numbers.
12. Many packages provide additional functionality. For example, we may be able to estimate the feasibility of potential contracts and create offers. 
13. Related features, such as performing payroll processing and managing inventory levels, are often available for an additional fee.

2. Identify your needs

Before comparing accounting software packages, consider how you will use the software and what features you need for UK business. With clear priorities, you can evaluate packages and identify the best products.

What are your UK business goals? 

For example, you can capture 10% of a particular market within five years or open ten new stores.

1. What features should your accounting software include to achieve these goals?
2. Who will use the software?
3. Everyone using the system should participate in deciding which software to purchase.
4. What do employees want from the new accounting system? 
5. What’s wrong with your current software or approach?
6. Engage your accountant. Being able to use software to prepare financial statements and meet audit requirements is critical. They may prefer to work with a particular system, or they may advise you on purchasing a system.
7. What administrative information is critical to the operation of your business?
8. Easy access to critical UK business information so you and your advisors, such as accountants and consultants, have the data you need to improve your UK business and accelerate growth.
9. What types of information are most important to your business? For example, a retailer may need instant access to inventory information.
10. What accounting and financial management tasks do you need to perform?

Requirements may include:

1. Basic accounting
2. Cash flow management and budgeting
3. Management reports and up-to-date key information
4. Completion and submission of VAT and tax returns
5. Inventory control
6. Manage salaries, salaries, and employee expenses
7. project management  

What special needs do you have?

For example, do you run multiple UK businesses or trade internationally? If you buy and sell in different countries, you need software that can handle multiple currencies.

If I run an online UK business, can the software integrate with my e-commerce solution?

Want to link your accounting system to other systems you use, such as your customer relationship management (CRM) system? Your accounting system is at the heart of your business. The software should be simple and easy to use but should provide a high level of compliance. 

Here are some things to consider:

1. Make sure your software provides an audit trail.
2. Must be able to track all transactions made throughout the year. The software should be able to delete erroneous entries, for example, but it should also be able to log what has been deleted so that it can be double-checked if necessary.
3. Software must comply with good accounting practices. For example, if you only received a partial payment, the invoice should remain open in the next billing period.
4. See how the software manages backups.
5. Software must always be up-to-date.
6. You should be able to keep records for as long as you need them. For example, most account information should be retained for six years, and most salary information should be retained for three years.

3. user-friendliness

The software you choose should be intuitive and easy to use. Consider the following when considering your options:

How easy is the solution you’re looking for?

Ease of use may be a priority for sole proprietors or small UK businesses. Larger companies with experienced accounting staff may require more sophisticated solutions.

1. How easy is it to get started with the software? 
2. How complicated is the software setup? What do I need to do to install and configure it?
3. What other systems or software would you like to connect to, and how complex is it?
4. Can existing accounting records be automatically imported, for example, from a spreadsheet or another accounting package?
5. Are the people using it already familiar with the software or similar packages? How easy will the software be to use?
6. Can you simplify or automate routine tasks? For example, include your logo and contact details on invoices.
7. Can you add (or link to) more information about your customers or suppliers?
8. Can I customize my account and administrative reports to meet my specific needs? 
9. Is the system easily accessible and operable from anywhere, making it easy to review information or add data (such as travel costs)?
10. Can I link my business bank accounts to automatically import transactions and facilitate reconciliation?
11. Is it easy to share data with your accountant, or does your accountant have direct access to your accounting records?
12. Will I be trapped?
13. Do you buy software directly or pay monthly subscriptions? Need a support or maintenance contract? Can I cancel at any time, or do I need a notice period?
14. In the future, will we be free to export all data to different packages if needed? 

4. Options and costs

Small UK businesses typically prefer online accounting solutions. Software is provided as an online service, and data is stored and processed in the “cloud.” You can log in and use the service from anywhere.

Pay monthly subscriptions based on the number of users, transaction volume, and features you need. Monthly fees are typically between £10 and £30, with additional charges such as payroll. There are no upfront fees, and software providers provide updates and technical support.

Since your company’s financial data is outside your organization, you should be confident that you are dealing with a provider that encrypts and protects your data. You should also keep a backup of yourself in case something goes wrong.

Popular packages include QuickBooks, Xero, Sage, and FreeAgent.

Apps that integrate banking and accounting functions are growing in popularity.

The app is designed to be extremely easy to use, linking banking, payments, and basic accounting functions. App functionality tends to be relatively limited compared to traditional accounting software packages.

1. Such a solution is particularly attractive to sole proprietors and small businesses with relatively simple accounting needs.
2. Popular apps include Coconut, Countingup, and Tide Business Bank Account.
3. Monthly fees are typically between £0 and £50, depending on transaction volume.
4. Desktop and server-based packages offer greater control but require more time and knowledge to set up.
5. Desktop accounting software is installed on your computer. It is usually only available on this computer, and all data is stored there. Desktop software has declined in popularity as cloud accounting software has become more popular. However, using this means that all accounting data remains in-house.
6. Server-based software runs on your company’s central server. This means that multiple people can access it at the same time. Often used by large companies that have the resources to set up and manage software.
7. Even larger companies now heavily use cloud-based solutions such as Sage Intacct.
8. Accounting software often comes with add-ons or modules.
9. Software vendors often provide modules for related functionality, such as payroll.
10. Large vendors typically provide an “app store” or marketplace to facilitate integration with other enterprise software. For example, link accounting software to e-commerce and payment providers. Company employees must be trained to use the software.
11. Account administrators need detailed knowledge of the system.
12. Employees responsible for specific functions must be able to perform those tasks. For example, sellers need to know how to issue invoices.
13. Intensive training can be expensive but is often cheaper than learning through trial and error.  

5. Buy accounting software

We recommend that you seek unbiased and independent advice from a professional before purchasing any software. Find someone who understands your business needs and the capabilities of different software packages.

1. Most Accountants Can Advise Companies on Software Selection
2. Some accountants have more experience than others in dealing with different platforms.
3. Good accounting software reduces reliance on accountants who have a vested interest in recommending specific accounting software packages. 
4. Additionally, they may prefer to use software that makes their lives easier. But you need software that fits your business.
5. Some accountants are software resellers.
6. Large accounting firms may have their own accounting software division.
7. Again, there may be a legitimate interest in selling certain software. If in doubt, seek independent advice. Many of our resellers are also software developers. You can adapt the software exactly to your needs. However, for small businesses, the cost of customizing the system usually outweighs the benefits.
8. In many cases, you can customize your cloud accounting software by choosing the best add-ons for your business.

Take away

Finding the right accounting software is easy once you know what you need and the factors to consider. It is also helpful to make a list of features that will help your business.