Find Out Why You Should Use Tax Accounting Software

By: Kelly Hunter

You can’t afford to let your numbers slip in the accounting game. Your business could flounder because of unpaid bills, as could your credit rating. The tax authorities need to clearly see the difference between income and expenditure. And so do you.

Small businesses may even try to keep the books by hand. This may seem like a cheap option, until the factor of human error is taken into account. A better option would be a spreadsheet, using special features of readily-available software such as Excel and the advice of a good accountant.

Better still, you could avoid having to design a spreadsheet yourself and use purpose-built accounting package. Then you just have to keep up-to-date with the data entry: bills and bank movements, payroll and stock control. All entries are automatically assigned to the correct place and messages will be generated inviting you to print invoices, follow up payments or reorder stock . Compiling those decisive, decision-making reports will become child’s play.

Financial reporting can highlight key issues which can make or break your business. For example, if you find you are over reliant on a particular customer or supplier, you may like to look for an alternative. You can take a firmer line on habitually late payers and perhaps offer discount packages to entice punctuality.

Economies could be made by suggesting discounts to your biggest suppliers. What’s more, you may be interested to make comparisons with the same periods from the previous year to see whether you are up or down and try to pinpoint any changes. If there are any variations in profitability for similar types of jobs, you will wish to find out why.

Near-future forecasts will be easy to make, allowing for better planning. Are you likely to be able to cover costs? Do not wait to find out the hard way. Likewise, budgeting will be better in hand. You can assess your targets in terms of whether they are realistic and if you are meeting them or not. It is clear that you could benefit from a good software package – but which one?

Your decision will be largely guided by the size of your business. For small traders, a personal finance management program such as Intuit's Quicken or Microsoft Money may be enough for you. They are aimed at household use, but the latest versions come with so many accessories and handlebars that it would be enough for someone without too many customers or invoices to keep track of.

For bigger business with rapid expansion plans, which use more than one currency and several bank accounts, Microsoft’s Money may be the answer. The approach here is more rigorous (and more jargon-packed) and you will have many more options for compiling reports.

Intuit's QuickBooks Pro is a best-seller, perhaps because of its simple start-up. Your use of it grows as you learn to handle it better. In the end, up to 125 different reports can be elaborated.

Spreadsheets are not a legal requirement when it comes to tax declarations, but you will appreciate the chance to put your viewpoint clearly to the taxman – who is more likely to take your word for things if they are professionally presented. Not to mention your bank manager.

So take a tip from the professionals – and enjoy your next fiscal and accounting year!

Taxes
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