Online accounting software is a cloud-based, automation tool used to keep track of your financials, cash flow, and bank accounts – making your bookkeeping process more efficient and secure. It is also an invoicing and reporting software that allows you to manage and run your business online.
In this blog, you’ll learn:
- The difference between software and spreadsheet.
- Can software replace an accountant?
- Can accounting software help reduce cost?
- How to choose the best online accounting software for your business.
- When you set up on software, you can enter in the tax rates depending on where and what you’re selling. Calculations are then done automatically based on these rates.
- Software providers usually have helpful resources, such as videos and guides, to help you with frequently asked questions.
- You need to manually put in formulas which can get confusing and difficult to track.
- It may be hard to find the right support because the spreadsheet will be customised to your business.
- There is no need to have separate invoicing software because you can send and keep track of invoices directly from accounting software.
- You can set up automatic payment reminder emails. For example, on Xero (Global leader of online accounting software), you can send invoice reminders for when an invoice is 7, 14, and 21 days overdue.
- Some software allows you to connect your bank account so you can get daily bank feeds and set up automatic bank reconciliation.
- You need to manually send and keep track of invoices or use another software.
- It's not easy to set up automated regular tasks on a spreadsheet and may end up taking a lot of time to set up.
- Bank reconciliation can seem like a long, monotonous task because there is no simple way to compare the data on a spreadsheet to your bank account statement.
- You can categorise your clients, suppliers and products and view their email address, how much they owe you and payment dates in one place.
- If you offer multiple products and services it can get confusing to keep track of multiple sheets.
- Data is protected by multiple layers of security and some software, like Xero, offers two-step authentication.
- If you forget your password, you can request to reset your password.
- You can invite users to view your accounting software but you control what they have access to so you don't have to worry about accidentally changing settings or sharing sensitive information.
- The most common spreadsheet, Microsoft Excel, doesn’t store passwords, so if you lock your worksheet and forget your password, you can’t recover it.
- When you share a spreadsheet you can choose whether a person can view, comment or edit. If you have sensitive information, the most you can do to secure your data is to prevent people from downloading, printing or copying it.
- It's easier to find mistakes in software because there is usually a digital footprint that will help you find, replace, track the history and make notes, so you can view any changes that were made and by who.
- Prone to error and mistakes through copy & paste and multiple cells and sheets.
- Hard to keep track of what changes were made and by who.
Can accounting software replace an accountant?
Some business owners may not be able to justify the cost of subscribing to software and working with an accountant so you may be weighing up which one to choose.
There are important jobs an accountant does that software doesn’t and vice versa – both are extremely useful to help you manage and run your business efficiently and effectively.
To make the decision easier, look for an accounting firm that offers an accounting software subscription included in their fee. This means you’ll pay your accounting fees to one service provider and you can also have confidence that they will support you set up the software correctly.
What does an accountant do that software doesn't?
- Communicates with Revenue and the CRO on your behalf. They also act as your tax agent with Revenue which means your accountant will look after your tax affairs.
- Keeps track of your accounting and compliance deadlines. If you’re busy managing a business, you may not have the time or knowledge to keep track of your corporate deadlines, an accountant will look after this for you.
- Prepares your tax returns and financial statements. Accountants take care of complex compliance requirements so you don’t have to worry about learning how to complete government documents. They will use the information provided during the bookkeeping process to prepare your tax returns and ensure you’re claiming tax-deductible expenses. Check out our guide on bookkeeping for small businesses as well.
- Keeps you up to date on important legislation and Revenue updates. It’s not often there are changes made to government procedures, but when there are, your accountant should be well informed on how it will affect your business.
- Offers tax advice and ongoing support for new and growing businesses. An accountant is often seen as a trusted advisor and therefore, you can go to them for advice on specific matters relating to your business.
Can accounting software help reduce business costs?
Pay suppliers on time
Set up payment reminders on the software so you don't forget to pay your suppliers and incur interest. The real-time cash flow report can also help you determine the best time to make payments.
Keep track of inventory
You can keep track of your inventory by assigning product codes and share the software with floor staff so they can manage your items.
Get paid faster
Connect payment services such as Stripe, GoCardless and PayPal to accounting software so it's easy for your customers to pay you.
Xero carried out a study on their clients and found that in the UK, Xero customers got paid an average of 15 days faster than non-Xero users.
When you use accounting software, accountants don't generally need to go through each individual receipt and bill as they would with paper copies.
This means they may be able to complete your financial statements quicker and perhaps offer a discounted rate.
How to choose the best online accounting software for your business
1) Consider the skills you have
Are you used to traditional paper-based bookkeeping or not confident using accounting software? Look for software that is user-friendly and has online resources to help you set up correctly. Examine their website, screenshots, and how-to videos to determine if you’ll be able to use the software properly.
If you’re still unsure, talk to one of their sales representatives or sign up for a free trial.
2) Determine your budget
Most software provides tiered packages depending on the level of service you need, from basic to advanced settings. If you’re a new business owner, you might consider starting with the smallest package and then work your way up as your business grows.
There is no problem starting with free software and then switching to a paid software later. Your accountant can help you with the transition if you’re moving in the middle of your financial year.
3) Get help from your accountant
If you’re new to accounting software, it is wise to seek advice from your accountant on the best software for your business. Accountants are usually well-versed in the different software options and may be able to provide insight into the best one for you. Choosing a Xero accountant can be a good place to start if you don’t have an accountant yet.
4) Join our Take Your Accounts Online with Xero webinar
We usually recommend Xero online accounting software because of its beautiful, easy-to-use functionality but our accountants are happy to work with whatever software you’re currently using.
If you’re deciding what software to use, register for our free, live webinar: Take Your Accounts Online with Xero.
It’s hosted by Carl Doolan, one of our Xero Certified Users, and he takes you through the features and benefits of using Xero in your business. You can ask questions using the Q&A and chatbox function during the webinar.
Take Your Accounts Online With Xero
Register for our free, live webinar that introduces you to Xero online accounting software.
We have moved our own business over to Xero and highly recommend it for micro and small businesses.
Join Carl Doolan, Xero Certified User, as he goes through the features and benefits of using Xero accounting software in your business.Register Now
Want to talk to us?
In summary, online accounting software is a vital tool in any business. It is a cloud-based system that helps you manage your business more efficiently. You can use it to send invoices, pay suppliers and manage your cash flow.
If you have any questions about using accounting software in your business, get in touch with our Client Services Team – we’re always happy to help businesses to automate their accounts and get their focus back!
Alternatively, join our Take Your Accounts Online With Xero webinar. This will give you an introduction to the benefits and features of accounting software.
Kiera leads the Bookkeeping, VAT, and Payroll Teams at Accountant Online. Kiera has worked in the financial services industry for over 18 years. She is passionate about helping businesses to get their finances in order so they can get back to what’s important: running your business. Kiera holds a part-qualified accountant qualification from ACCA.