5 Reasons Why You Should Use Accountancy Software | accountants newcastle

5 Reasons Why You Should Use Accountancy Software

If you know me professionally you will in all likelihood heard me harping on about using software to manage your business finances. At Accounting Inc. we are Xero bronze partners. We recommend Xero accounting software because we feel it is the best product on the market. Xero provides the best solution for our clients. We do not receive any commission for recommending Xero. Some accountants receive commission for selling rival other platforms.

You may ask why do we recommend using accounting software such as Xero? In this post I will give you 5 reasons why you should be adopting accountancy software in your business.

1. Make smarter decisions

A recent study showed that 1 in 4 businesses are still using paper ledgers to record their numbers. For most small businesses growing sales, having cash available and keeping compliant tends to be the focus. Small business owners are not accountants or bookkeepers. Therefore spending time can be at the bottom of the priority list.

As most things in life you’ll get out of accountancy software what you put into it. A well managed system will give you real-time insights to run your business. These insights will help you make smarter, faster more informed decisions. Let’s talk about dividends. Equity dividends can only be paid from profits. If a company does not have sufficient profit reserves available the dividend will be treated as an illegal dividend or reclassified. Therefore companies must know what profits are available in order to pay dividends.

2. Manage your sales

Accounting software such as Xero enables you to invoice your customers directly from the system. You can easily manage your receivables. Using spreadsheets or paper ledgers in most cases do not help you do this. You can send customers statements and even collect payments.

3. Manage your expenses

Again similar to sales you can manage all your expenses within good accounting software. Tools like Hubdoc and Receipt Bank make capturing expenses easy. These intelligent bits of software mean things like data entry and traditional methods of recording costs are a thing of the past. You can manage your supplier accounts and run expense claims all within your accountancy software.

Xero even has a payroll and VAT module. This can be a cost-effective way to prepare and submit VAT returns. Process pay runs. Make PAYE declarations and manage staff.

4. Plan ahead and save tax

if you have accurate up to date numbers this will allow you plan ahead. If you can forecast your annual profits this will help plan ahead for future taxes. Making a pension contribution from the company can reduce profits and corporation tax. This can be favourable for many business owners rather than lining HMRC’s profits.

Investing in equipment or vehicles before the year-end can also help mitigate tax. Project planning and utilising research and development tax credits can also save corporation tax and even provide a much welcomed cash refund.

5. Making tax digital (MTD) compliant

The first stage of HMRC’s new directive Making Tax Digital (MTD) for VAT goes live in the UK from April 2019. Businesses with sales above the VAT threshold currently £85,000 will be required to keep digital books and submit VAT returns to HMRC through MTD compliant software.

This is the first stage of MTD. In time all businesses will be required to keep digital records and report on profits to HMRC quarterly. This will be phased in over the next few years. However now is a great time to take your business digital and adopt accountancy software.

At Accounting Inc. we are a fully digital practice. We specialise in Xero and financial systems. We can get your business online. Convert your current accounting system to Xero and provide full training with unlimited support.

We have a number of special offers in the lead up to Making Tax Digital. Please contact us to arrange a free consultation and to learn how we can help your business.

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