Reliable accounting software is likely to benefit many businesses. However, such software sometimes comes with its share of problems, so it is important not to overlook the possible issues.
Advantages of accounting software
Benefits of accounting software include:simple data entry - it is typically fast, straightforward and only required once fast processes - delays, for example between a sale and invoicing, are minimal digital record keeping - essential for Making Tax Digital for VAT automation of reports and analysis - eg on profit and loss, debtors and creditors, customer accounts, inventory counts, sales, forecasting, etc automation of tasks - eg calculating pay, producing payslips, calculating and submitting VAT, etc reduction of errors - eg transposition of figures, incorrect or incomplete recording of transactions, etc integration with other systems, such as online banking and e-filing
Using accounting software can help you save time and money, and offer you valuable insight into your business. If you choose the package carefully, investing in a computerised accounting system can be one of the best decisions you can make for your business.
Find tips on choosing the right accounting package and use this HMRC service to search for record keeping and bridging software
that is compliant with Making Tax Digital for VAT.
Disadvantages of accounting software
Certain problems and disadvantages are worth considering if you are looking to use accounting software in your business. For example:Price - the package cost, although small in relation to your other costs, is higher than a paper-based system. Implementation - manual accounts are generally easier to set up and can be more flexible than computerised accounting. You will probably need some initial help setting up accounting software. Your accountant or system provider will usually charge you for this service. Support - you may need to purchase yearly maintenance and support for your package. Specialised needs - an accounts package will typically suit most types of business. However, specialist businesses may need to refine the package or change their processes to use accounting software successfully. See more on specialised requirements for your accounting package.
Accounting software may sometimes also have a steep learning curve, so if you are more comfortable writing up ledgers and books, keeping manual accounts may be a simpler option.
Do I need to use accounting software?
Not all businesses will benefit from using accounting software. However, you can't successfully manage your business without some sort of an accounting system. Whether you choose manual over computerised accounting, it's entirely up to you. See how to keep business accounts.
Small or new businesses are probably likely to use manual accounts or a combination of manual and computerised systems until their accounting needs become more complex. You can use our accounting requirements checklist to help you assess and prioritise your accounting needs.