Why you should use accounting software with your website

Why you should use accounting software with your website

Tuesday 1st May 2018 at 08:24

By Rob


We believe that computers should make our lives easier! With that in mind today we're looking at why we believe EVERY business should use accounting software to save them time, save them money, and generally make their lives more hassle free.

Many of our clients are small to medium sized businesses, and don't necessarily understand what accounting software is, and perhaps even what the difference between a bookkeeper and accountant is, so this article aims to explain everything in plain English, and why we believe you should be using accounting software with your website if you sell online.

 

I've broken it down into 7 easy to digest sections:-

1) Accounting basics and jargon explained

2) What is accounting software, and what does it do?

3) Most common accounting software

4) Why you should use accounting software

5) The "old skool" alternatives to accounting software

6) Why you should integrate your website with accounting software

7) How we can help

 

A quick disclaimer

Please note that we are a web design company, and not accountants so our advice here is from our own experience in integrating websites with accounting software to save clients time and money. We are not able to provide accounting advice.

All prices are correct at the time of writing.
 


1) Accounting basics and jargon explained

As many readers may be new to running a business, or using accounting software, here is some basic "jargon" and accounting basics.

 

What are accounts?

Every year every company has to produce a set of "accounts", which show everything they've sold, and everything they've purchased.

If you're a limited (Ltd) company you'll produce annual accounts, on top of your personal tax return.

If you're a sole trader, then your accounts will be combined with your personal tax return.

Accounts are usually prepared by a bookkeeper, and signed off by an accountant (see definitions below).

 

Who is who?

Role What they do, in plain English

Bookkeeper
 

A bookkeeper is someone who collects all the receipts for everything you've purchased, and ensures you have invoices for everything you've sold, so you have totals for how much money you've taken (income / turnover), how much you've spent, and what your profit is. The result is known as "P&L" (profit and loss).

A good bookkeeper would usually do this monthly or weekly, so you know exactly where you're at financially.

They essentially do the hard work to prepare everything for the accountant.

Sometimes small business owners do their own bookkeeping, and provide it to their accountant.

Accountant
 

An accountant is usually someone who looks at all the work your bookkeeper has done, makes sure it is correct, and advises you on being tax efficient, and ensures you're complying with the law.

They will prepare everything that is sent off to HMRC and Companies House.

Sometimes your bookkeeper and accountant will be one and the same person.

HMRC

HMRC stands for Her Majesties Revenue & Customs, previously/also known as the "Inland Revenue".

These are the people who collect your tax.

Companies House

If you're a registered company, eg an Ltd company, then it is Companies House who you will be registered with.

It's not necessary to be a registered company to run your own business however, as you can operate as a sole trader.

 


2) What is accounting software, and what does it do?

Accounting software usually does the following:-

  • Allows you to create and keep a track of invoices
  • Log everything you've spent
  • Work out who hasn't paid you
  • Ensure what you've received into your bank account matches up ("reconciles") with what is in your accounting software
  • Prepare your accounts and VAT returns

Accounting software is usually used by:-

  • Your bookkeeper to input all your receipts etc
  • Your accountant to prepare your accounts
  • You to understand where your business is at financially

 


3) Most common accounting software

Below are the three most common accounting software packages we encounter.

We can't advise on which is the "best" accounting software to use, as it all depends which is best for your business. Often you'll find that your accountant is more familiar with one accounting software than another, so may prefer that you use particular software as it's what they know.

Our personal favourite is Xero, but that's not to say it's right for everyone.
 

Software Summary

Xero

www.xero.com

From £10/month

Our personal favourite. Why? Because we find that it's the easiest to use; and we believe in easy!

Xero is cloud / web based, so to get into it all you need is a computer connected to the internet.

It's very easy to use, and is improving all the time.

It also has lots of automated features to automate tasks such as bank reconciliation and VAT returns.

Sage

www.sage.com

From £6/month

Founded in 1981, this is probably one of the oldest accounting software systems on the market.

Whilst Sage has developed some newer versions of their software which you can access via the web, Sage usually requires a PC (not Mac) and for the software to be installed on your computer, and requires more traditional "networking" to be accessed on more than one computer.

Sage now have a range of solutions now that include a cloud (web) based solution "Sage Business Cloud Accounting" which you can access from anywhere with a web browser, just like with Xero. However, it is very basic and not a patch on Xero.

Sage is very powerful however, and probably has the most sophisticated range of features compared to some of the other platforms.

It's not the easiest to use though; so people who are technophones might not get on too well with it.

Quickbooks

www.quickbooks.co.uk

From £6/month

QuickBooks is geared mainly toward small and medium-sized businesses.

Like Sage, traditionally their software was PC and application based, so couldn't be accessed from the web. They do however now have QuickBooks Online (QBO) which is cloud/web based like Xero.

 


4) Why you should use accounting software

Here are the top four reasons why you should use accounting software:-

  1. To save time
    The idea of accounting software is it can do a lot of the boring calculations for you, to save you the time of doing it.
     
  2. To automate boring tasks
    There are many tasks such as bank reconciliation and VAT returns that many accounting software systems can do so you don't have to
     
  3. Financial efficiency
    If you've got an accurate record on your finances, then you can operate your finances more efficiently
     
  4. To stay legal
    Every business, regardless of whether you're a sole trader or registered company, has to keep a track of their finances and pay tax. Accounting software is one of the key components that enables you to do this.
     
  5. Because as of next year, the government will make you!
    The UK government are introducing what they call "Making Tax Digital" (or "MTD"). It basically means that all businesses will need to keep digital records (no more bags of receipts!) and make quarterly returns, much like a VAT return. The digital records CAN be a spread sheet, but software like Xero will integrate with HMRC to make quarterly reporting easier. Enrolment is being staggered. VAT registered businesses from April 2019 and other businesses year after. The fine details are not available yet, but it is something to be aware of. Click here for information from the gov.uk website.
     

5) The "old skool" alternatives to accounting software

Here are the "old skool" alternatives to using accounting software.

Alternative Why it sucks

Paper records

You can't automatically work out totals, like you can do with a computer.

It's much more time consuming.

If you have a fire, record are easily lost.

It's generally inefficient.

It will cost you more money in accountancy fees, as a bookkeeper and/or accountant will have to go through all your paper records so that they can do their jobs.

Spreadsheets

A spreadsheet can't do the automation such as bank reconciliation, VAT returns, etc that many accounting software systems can do.

As with paper records, it may cost you more money on accountancy fees as your accountant will most likely need to input the information into the accounting software they use so they can do their jobs.

Doing nothing

Well, as you legally have to report on your accounts, doing nothing simply isn't an option!

 


6) Why you should integrate your website with accounting software


What is integration?

What we mean by "integration" is simply linking your website to your accounting software.
 

What can it do?

The two most common aims of integration are:-

  • So invoices are automatically created in your accounting software when orders are placed on your online shop
     
  • To syncronise stock information
     

The benefits

1) Save time as integration automates boring tasks such as invoicing creation for you

2) Save money on bookkeeping/accountancy fees as integration automates a lot of the work

3) Have a clearer view on your financial picture because integration means you can always be up to date with your invoicing and stock information, rather than only being up to date once a month once your bookkeeper has created all your invoices manually

 


7) How we can help

Our ecommerce websites can integrate with Xero and Sage, and we may also be able to integrate with Quickbooks.

We believe in making life easier... we believe that computers are here to do hard work for us!

So not only do our beautiful websites help you sell online with ease, but our integrations with the likes of Xero and Sage can save you time and money too.

If you're an existing client, and are interested in integrating your online shop with accounting software, please don't hesitate to contact us.

If you're not currently a client and would like to see how we can help you sell online easily, then get in touch! We look forward to hearing from you.


We can help you sell online easily too!


We have been helping antiques, vintage and art dealers sell online easily since 2004, and we can help you too.

If you need a new website for your business, contact us on...

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+44 (0)1332 898 429

As well as a hand held service, all our customers receive a copy of our marketing tips book which gives you lots of tips and advice on this on how to succeed online.



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By Rob
Tuesday 1st May 2018 at 08:24



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