Spreadsheet Or Accounting Software - What To Choose For Your Business?
Should you use a spreadsheet or accounting software?
Do you own a business? If so, you might be considering whether to use a spreadsheet or accounting software to manage your financial accounts. Both have their benefits and drawbacks, but it’s vital to stress the importance of keeping business records well-organised in general. Business owners are required by law to keep their financial records in order, and a good bookkeeping system will give you peace of mind and comfort knowing that even if HMRC asks for evidence of your financial transactions, you’ll be well prepared. Check out our blog “How Long Do You Have To Keep Business Records?” for more information.
When it comes to bookkeeping, you can find a lot of great information online and it’s a really good starting point, but nothing beats a conversation with a financial professional who has a clear understanding of your business finances and responsibilities.
Joanna Bookkeeping offers flexible accounting and bookkeeping packages that are built to match the individual needs of your business. Get in touch with our Oxford-based team today, and discover how we can help with accounting software and so much more!
As a business owner, you have a few options when it comes to how you record and organise your transactions. You can choose from the traditional bookkeeping method or accounting software. The right choice for your business depends on a few factors. The most important thing is that whatever system you choose has the features needed for managing your finances effectively so that they don’t get too overwhelming!
Spreadsheets
Spreadsheets are one of the most popular tools for small businesses, and for good reason. They’re inexpensive, easy to use, and highly customisable. You can create a spreadsheet that works just right for you, from tracking your inventory to calculating profit margins. However, we would only recommend spreadsheets as a bookkeeping tool for very small businesses or start-ups as a way of reducing initial costs. It can work great for sole traders or partnerships using a cash basis accounting, recording transactions based on the actual cash movements.
The most common platforms for spreadsheets are Microsoft Excel or Google Sheets. They’re ideal if you’re looking at something simple like tracking invoices and payments, but they lack some key features such as integrated payroll management.
Advantages of using spreadsheets
- Quick to set up
- No additional cost or a very small cost
- Simple to use
- Can be easier understood by non-accountants
- Can be easy to manage if you're a very small business
Some disadvantages of spreadsheets
- Prone to accidental changes and updates
- If things go wrong and cells in a spreadsheet affect other numbers, it can be more difficult to rectify
- More difficult to spot errors, some can be missed completely even by accountants or bookkeepers
- Time-consuming to manage for bigger businesses
- Trickier to set up and manage for businesses that use accruals accounting
- You need to set up your own reports
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Accounting software
The other option is to use accounting software. Accounting software can be used by people who are self-employed as well as limited companies. It’s a great way to keep track of your finances, manage your business, and manage your customers. Accounting software is great for managing suppliers too!
When choosing the right accounting software for your business, you want something that’s flexible enough to easily adapt to your needs as they change over time.
There are many factors to consider when choosing your accounting software. The most important thing to keep in mind is the need for the software, and whether or not it will be able to meet your business’s needs. If you find that you can get more done with a different tool than what you currently use, then it may be time for an upgrade!
Advantages of using accounting software
- More up-to-date information
- Provides reports that are automatically updated when you're doing bookkeeping
- Allows to automate bookkeeping and reduce time or bookkeeper's costs
- Gives an option of issuing invoices to clients
- Can link to payment providers helping you collect payments from clients
- Can help with debt management and chasing customers
- Can notify you about potential risks and errors (e.g., duplicate invoices being entered)
- Can speed-up tax returns and accounts preparations (if bookkeeping records are correct)
- Less risky to make accidental changes but this can depend on a particular software itself
Some disadvantages of accounting software
- If you're not an accountant or a bookkeeper you can really make a big mess in your records which can be expensive to correct
- Usually means an extra cost but can be justified if you're getting good accounting software in return
- Can be more difficult to understand if you're not an accountant or a bookkeeper (you may consider basic training from your accountant)
- If you choose the wrong accounting software or the wrong package, the features can be overwhelming making it more difficult to manage
Accounting software is great for larger businesses that need more advanced features like automated financial reports, multi-currency support, payroll management, and an integrated CRM (Customer Relationship Management) system. However, some accounting software providers offer small packages that can be great for small businesses and be even easier to manage than a spreadsheet. Talk to your accountant for more info as they will have experience of using different software and they’ll be able to advise.
Keeping track of your business finances can be a challenge, and if you’re a new business owner it’s likely you’re already looking for ways to save time and money. Keeping track of your accounts can help you do both!
Our Oxford-based accountants are on hand to help you find the best financial solutions for your business. We’re fully digital, so we can offer our services to businesses all over the UK.
Your Accountant in Oxford
Oxford Office
Joanna Bookkeeping
The Wheelhouse Angel Court
First Floor, Angel Court
81 St Clements St
Oxford
OX4 1AW
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joanna@joannabookkeeping.co.uk
01865 591952
