Recording financial transactions and meeting your legal duties
Your new business is named and ready to start trading but how are you going to record its financial transactions and meet your legal duties?
In our recent blog on “VAT and the start-up enterprise” we referred to Making Tax Digital (MTD) and the new VAT rules. These proposed regulations confirm the centrality of the digital recording of accounting transactions. Unless you have a very simple and small business this means using an accounting programme. Desktop Apps are rather dated and inflexible. If you have to email backups there will be GDPR issues to consider.
The obvious solution is to use an online accounts app. These Cloud based programmes are brilliant. You, your staff and your accountant can all be working on live data. Most have Apps for phones or tablets, so as long as you can access the internet you could be sat on the beach and still be sending out invoices, reconciling your bank account or posting last month’s depreciation!
We find that with these Cloud products you get what you pay for. If the accounting system is free or cheap then it will be free or cheap for a reason. Our advice is to invest a few more pounds each month – it will save you time and probably money in the long term.
This is why we recommend Xero. It isn’t perfect but in general it is better than the other Cloud packages.
It will email your quotes, invoices, credit notes and statements out to customers. You can attach pdfs, pictures or other documents to transactions. If you have a query you could call us up, we would log on to your data and we could talk it through with you, making sure that everything is posted correctly.
But the best bit is the interaction with bank accounts. An increasing number of banks have direct bankfeeds with Xero (for example Santander and HSBC), other banks have indirect bankfeeds via a third party provider (for example Lloyds, NatWest and Barclays) but some banks you have to download the statement and then upload it into Xero. With the direct bankfeeds yesterday’s bank transactions just appear on Xero the following morning. And once the information is in Xero, then with one click of a mouse you can reconcile the bank account and record a sales invoice as being paid. This is so efficient.