Keeping an up-to-date record of your financial activities is an essential part of running a business. Web-based accounting systems can offer useful features for small business owners – and more and more are choosing to take their accounting online.
The main advantages of online accounting are immediacy and convenience. With a web-based system, business owners can manage any aspect of their accounts – all from anywhere they have Internet access. If you’re thinking of setting up your bookkeeping online or migrating from an existing system to an online system, following these four steps will make the process easier.
1 Chose it
Take time to find the right online accounting software for your needs and seek expert advice. What makes it right for you? First, a good interface. If you find it intuitive to browse and can quickly find the features you need you’ll have a much easier time when using the system.
Second, does it offer multi-currencies? If your business requires you to have multi-currency accounts, this is a deal-breaker.
Third, VAT. If your business is subject to slightly complicated VAT rules, find out if the software helps. Also, not all software implement reverse charge calculations automatically – so you may wind up making mistakes on your VAT Returns.
Fourth, does it offer a good journals module? Your Accountant may need to post a number of journals especially if you want your accounts to match the final accounts, but some software systems have a poorly designed module to enter Journals.
Finally, what kind of reporting is available? You may require comprehensive reports at the month-end, for example, and some may not offer project-based recording or retrospective reports for analysis, etc.
2 Process it
Allow for some time and cost during the migration process. Set a start date for the transition. Check the last submitted final accounts to get the opening balance figures, the trial balance and the balance sheet.
The exact steps will depend on your business type, but you can expect to do the following: reconcile the data, the bank, aged debtors and creditors; set all required nominal codes and project codes; set accounting periods, VAT periods and VAT schemes; confirm the right depreciation rates for the asset register; and customise the sales invoice template with your logo and design.
Hiring someone to help you can be really beneficial – be sure to allow a reasonable amount of time and budget. Based on size, this can be from £500 and a couple of days, to £3,000+ and a couple of weeks.
3 Test it
Test the migration by checking the balances. If migration is done in the accounting year April to March 2014, you should have balance sheets for March 2013 statutory accounts matched with opening balances on your new system now. Compare sample information from your previous system: for example main supplier’s statement, main customer’s statement, bank balances, etc.
4 Use it
Start using it – practice makes perfect! A learning curve is involved. Do not assume everything will go as easily as the advertisement states. There will be several ways of working within the system you have chosen, so find by trial what works best for you, and when in doubt – seek advice.
By making the transition to online accounting software you can save yourself considerable time, keep your records up-to-date wherever you are and ensure you have all the correct information recorded – both for your own use and for filing VAT returns and company accounts.
Copyright © 2104 Riz Wasti from 2E Accountants.
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