By Riz Wasti, 2E Accountants
When running a business – big or small – it is essential to keep an up-to-date record of your financial activities. Web-based accounting systems can offer a range of useful features and they have the added advantage of being both immediate and convenient.
With a web-based system, business owners can raise invoices , update their bookkeeping, look at the list of outstanding debtors and creditors, analyse their profits and cash flow and liaise with other staff members or accountants by creating additional users – all from anywhere they have Internet access. All of these are time-sensitive activities crucial to keeping a business smoothly ticking along.
If you are thinking of setting up your bookkeeping online, or migrating from an existing system to an online system, following these four steps can make the process easier.
Do your research and ideally get an expert’s advice
The cheapest option isn’t necessarily the best. And your friend’s recommendation, while well-meant, might not fit your businesses’ needs. Many online accounting packages have emerged in the past five years. They all have their merits and limitations. Some were designed with a focus on sales invoices and others provide a more organically complete bookkeeping system. Some are originally from USA or New Zealand so may not fit for every UK business.
What makes it right for you?
First, a good Interface. If you find it intuitive to browse, and quickly find the features you need, you’ll have a much easier time using the system.
Second, does it offer multi-currencies? If your business requires you to have multi-currency accounts, this is a deal-breaker. Not every software will help you there.
Third, VAT. If your business has slightly complicated VAT rules to follow, see if that software helps. Also, not all softwares implement Reverse Charge calculations automatically.
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 with 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 and find that certain software will not fit your needs; some may not offer project based recording or retrospective reports for analysis etc.
Allow for some time and cost to incur in the migration process
There are many things to think of in the initial setup 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 likely 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.
It’s often advisable to hire someone to do his work for you. Based on size, this can be anywhere from £500 and couple of days, to £3000+ and couple of weeks or so.
Test the migration by checking the balances
If migration is done in the accounting year Apr to Mar 2014, you should have balance sheets for Mar 2013 statutory accounts matched with opening balances on your new system now.
Compare sample information from your previous system, e.g. main supplier’s statement, main customer’s statement, bank balances etc.
Start using it – practice makes it perfect!
There is a learning curve involved. Do not assume everything will go smoothly. There will be several ways of working within your new system, 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 time, keep your records up-to-date wherever you are, and ensure you have all the correct information recorded.
About the Author:
Riz Wasti is principal of 2E Accountants. 2E Accountants Ltd is a London based Management Accounting practice. It specialises in working with small businesses offering a full range of experience but in a proportion that meets the needs of SMEs. In addition 2E can also act as a company’s Finance Director, Financial Controller, Management Accountant, and Accounts Payable and Receivable.
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