Installing accounting software shouldn’t be as daunting as it is made out to be, especially since the process is surprisingly simple.
Not to mention, transitioning from the traditional paper record-keeping model to an automated accounting system makes your business operations significantly easy.
It is essential that your financial records are well-organized and readily accessible for the tax season. So, having an efficient record-keeping system that keeps track of your loan payments, business-related bills, and personal finances helps streamline company processes. In today’s rapidly-changing times, it is a necessity.
Step 1: Understand the basics
As a beginner, it’s recommended that you get a grip on the basics of bookkeeping, accounting, and learn about your legal responsibilities.
Begin with understanding the difference between bookkeeping and accounting as a solid base is key to everything.
Bookkeeping is where you record company finances as a necessary step in business accounting. Accounting is an another hand where you analyze and scrutinize finance data to derive insights, devise a business strategy, and forecast outcomes for effective decision-making. This is a small but vital difference between the two.
Next, know what’s required of you. In the UK, companies should mandatorily be listed on the Companies House. Business, on the other hand, are required to be registered with HMRC.
Step 2: Choose the start date of your accounting period
When you opt for computerized records, the first step is to assign a start date for your accounting period. If you are a beginner, your finances will begin from zero and build over time. So, your start date will be the day you set up a business bank account.
For existing businesses, the start date corresponds to the start date of an accounting period. Any prior account balances will have to be entered into your UK accounting system manually and correctly.
Step 3: Assemble your financial records
You should have a record of every business-related purchase, income, expenses, credits, and debits, etc. Bank records usually constitute bank statements, payroll transactions, accounts receivable, and accounts payable. These are traditionally maintained in a spreadsheet or bookkeeping ledger.
If there is any proof of purchase you plan to encash for tax deduction purposes, hold onto them.
Step 4: Choose a UK accounting software
It is necessary that you research and purchase the right accounting software for your business so as to avoid problems down the line. There is a host of free UK accounting software in the market today that are both powerful and readily accessible.
Given the current disruptive times, it is best to opt for an accounting solution where bookkeeping is managed over the cloud, allowing maximized productivity and shareability. Free UK accounting software also ensures that accountants can access their finances from anywhere in the world.
They eliminate the flaws of traditional spreadsheet-based record-keeping systems where financial data has to be entered manually and is prone to greater security risks.
Automated cloud-based accounting systems, on the other hand, help businesses effectively save time and benefit from greater support. They offer airtight security and allow companies to analyze insights and forecast business outcomes for improved decision-making.
Step 5: Enter your financial records into the accounting software
Once you’ve purchased your preferred free UK accounting software, the next step is to set it up for use.
Accounting software providers usually assign an expert to guide you through the installation and customize it as per your requirements.
This includes setting up your accounts, initiating security procedures, and furnishing the software with prior finance records.
Once you’ve entered beginning balances, start entering your sales and transactions into your accounting software every month. Take out time to streamline all the accounts payable and receivable at the end of each month to avoid hassles during the tax filing season.
Keep a record of payments, invoices, bank deposits, and so on. Most UK accounting software allows you to upload invoices directly, saving manual labor on your part.
To conclude
Before you make some decisions, make sure you shop around for free UK accounting software in the market to determine which best caters to your requirements.
Dext offers a 14-day free trial during which you can evaluate your business needs and requirements. A Dext expert guides you through the set-up process and familiarises you with the software’s time-saving automation features so you can align your business goals accordingly.
Reach out to us today to get started!
