For a lot of small business owners, bookkeeping is one of those boring chores you’ll do anything to put off until tomorrow. Of course, tomorrow never comes and the task becomes even more unappealing as the days go by.
With the introduction of Making Tax Digital (the government’s scheme to move tax filing online, starting with VAT reporting), now is the perfect time to consider other ways technology and modern accounting software can help improve the management of your business finances.
If you’re still on the fence, let’s take a look at some of the ways bookkeeping software can make your life easier.
Clarity and ease
The greatest selling point when it comes to online bookkeeping software is how easy it is to enter and access information about how your company is performing. Of course, your software won’t be able to do it all by itself – you’ll need to keep things up to date, but this usually only requires small, regular efforts from you.
As with anything, you’ll get out what you put in – for those dedicated to keeping everything updated, you’ll be rewarded with simple, clear and accurate information regarding your business finances and tax obligations. Bookkeeping software is designed to make the process simpler, after all.
Helping you with VAT records and filing
Speaking of which, bookkeeping software can help you better understand when you need to start thinking about registering for VAT – and help you decide what VAT scheme is best for your business.
Legally, you must register for VAT when your company’s VAT-taxable turnover exceeds the current threshold of £85,000 over a 12-month rolling period. Similarly, if you expect the threshold to be exceeded in the next 30 days, you need to register. Without a reliable way of tracking your turnover, you might end up on the wrong side of HMRC – and you definitely don’t want to end up there.
If you’re registered for VAT, you need to make sure that your accounting software is compatible with the requirements of the government’s Making Tax Digital regime. This means that your VAT records are stored digitally and are sent to HMRC automatically each quarter.
Clear understanding of tax liabilities
With your business information stored neatly and accurately online, you’ll be able to quickly work out exactly what your tax liabilities are and how much you need to set aside to pay HMRC.
This is an invaluable asset for a lot of small business owners – with a clear idea of how much you’ll be expected to pay in Corporation Tax and VAT for your business, you’ll be able to budget with absolute confidence. It’ll also make things a lot easier when the time comes to get the information you need about the salary and dividends your company paid you in the tax year to include in your annual Self Assessment.
Know what dividends you can take
Of course, the other great part of knowing how much you need to pay in taxes is knowing how much you can put in your pocket. Bookkeeping software can help you get a clear idea of what dividends you can take from your company without falling foul of HMRC rules.
It’s worth remembering that it’s illegal to pay a dividend if your company doesn’t have sufficient profit after tax to cover the dividend amount. Bookkeeping software helps eliminate that risk, so there’ll be no difficult conversations with the taxman.
Easy bank reconciliation
Bank reconciliation is an important part of life as a small business owner. It’s a small, simple job that can have a big impact on your records and tax liabilities.
To reconcile your bank statements, you need to get all your bank transactions and match them against your recorded expenses and sales invoices. This can be frustrating work, especially since even a single missing penny can cause disarray. With online bookkeeping software, the job becomes far, far simpler.
At Crunch, we have secure links with a number of banks, so you can have all your business banking transaction data imported straight to your bookkeeping software, which then intuitively suggests a match in the expenses you’ve recorded or highlights any discrepancies. There’s no need to pore over paper records and drawers of receipts – you can just rattle through your bank reconciliation in a few mouse clicks, safe in the knowledge that everything is accounted for.
Ready to get started?
If you’re ready to get started with your very own online bookkeeping software, find out more about our own bookkeeping service and organise a call with one of our experts today. You can also download our handy bookkeeping guide for even more information.
We may not be able to make bookkeeping fun, but we can definitely make it much easier.