For many business owners when to upgrade from spreadsheets to accountancy software is not always something they consider when starting a business. Your focus is on growing the business and getting new clients. However, there are important legal and practical implications to consider.
In this article I will be discussing Xero and QuickBooks cloud accountancy software as this is preferred both by myself and clients.
You can find out more about Xero here - www.xero.co.uk
You can find out more about QuickBooks here - www.quickbooks.intuit.com/uk/
Your businesses turnover exceeds £85,000 per year (on a 12 month rolling monthly basis).
Regardless of if you are a sole trader, partnership or limited company the business will need to register for VAT when turnover of £85,000 is exceeded. This is calculated on a 12 month rolling monthly basis so if your monthly sales are £7,000 or more then this is something to be aware of.
From April 2019 it is a legal requirement to file "Making Tax Digital" (MTD) compliant VAT returns. The simplest way to do this is to submit VAT returns via MTD compliant software such as Xero or QuickBooks.
Xero and QuickBooks integrate directly with HMRC so the VAT return can be completed and submitted in the software without the need to log in to HMRC.
Problems chasing customers for payment.
There are countless payment services that integrate with accountancy software. A good example is Stripe integrating with Xero cloud accounting software. A payment button is included on invoices sent to customers via Xero making it easier for customers to pay. Including a payment service can lead to payments being completed earlier (up to 17 days according to Stripe) than they otherwise would.
Automatic reminders can also be set up so customers will receive an email if payment is late.
More information can be found here - www.xero.com/stripe
Payroll needs to be completed.
When completing either your own or employees payroll it is important that tax and pension calculations are correct. Using accountancy software makes this far easier than completing calculations manually. Xero and QuickBooks will also send reminders when an employee is due for pension auto enrollment with template letters for your employees.
Xero and QuickBooks integrate directly with HMRC for PAYE submissions as well as many pension providers for pension enrollment and payments.
You are a contractor or sub-contractor in the construction industry.
With the introduction of the "Construction Industry Scheme" or CIS, it is now a legal requirement to submit CIS returns to HMRC on a monthly basis if you are a business or contractor that makes payments to sub contractors for constructions works. CIS is much easier to keep track of using accountancy software.
More information can be found here - www.matrix-accounts.com/cis-construction-industry-scheme-for-contractors-and-sub-contractors-faqs
For more information or if you have any questions you can contact me at email@example.com
Limited Company packages start from £35 per month and include ongoing advice and support with monthly zoom or phone calls.
I am both Xero and QuickBooks certified and will be happy to help get your business set up on either software or resolve any issues you may have.
This article was written by Will Farmer MAAT.