As a limited company contractor, you’re busy, so you need a system which can keep up with your accounting needs. But does this take on the form of a spreadsheet or online accountancy software?
In this blog, Jenny Winslow from Intouch Accounting takes a look at how online software can make life quicker, easier and more accurate for both you and your accountant.
Why online accountancy solutions rule supreme for serious contractors
1. Spotting errors
It’s so easy to make a mistake in a spreadsheet, yet really tough to identify where the error occurred. Something as simple as a rogue decimal point, or dodgy extra number can send all your figures off course. Online software can spot any mistakes you make and highlight where you’ve gone wrong, giving you that extra peace of mind.
It also means your accountant isn’t charging you for extra time by trying to figure out any mistakes. It’s a win-win solution!
2. Working out VAT, credit control, dividends and payroll
Unless you have a sound understanding of how these things work, a basic spreadsheet will not be able to do this for you.
Online accountancy software will mean you know exactly where you’re at, plus you’ll never miss out on potential opportunities for maximising your take home pay. But it’s worth understanding that online software alone isn’t enough, your accountant will be able to give you specialist advice tailored to your own personal circumstances and goals, something which software alone simply cannot.
3. Real-time cash flow
A spreadsheet will never display the exact amount you have in your business account, which can be incredibly frustrating.
Online software will always show you a generated overarching view of your finances and how much you can expect. This is also good news for your accountant as they’re able to give you a much clearer understanding of your finances and advise you accordingly. Again, whilst an online system can tell you how much you have, it’s your accountant who can advise you on what to do with your money.
4. Cloud-storage safety
Servers crash, viruses corrupt and hard drives break, so why would you put your trust in a spreadsheet system which could let you down?
Online accounts stored in the cloud means you can access them whenever you like, without the worry of losing your data. HMRC are increasing keen on seeing companies’ accounts from the past seven years, and they don’t take kindly to the excuse that your spreadsheet ate your records. Put your faith in an online system which keeps your data secure and ready for anything, plus you can access it wherever you like.
5. Ease of sharing
Sharing a spreadsheet is a pain, especially when you need your accountant to have instant visibility. Having to save a version and share it with them, then wait until they’re done before you can make any further amends can open you up to frustration and the possibility of mistakes.
A 24/7 online accounting system means both you and your accountant can be looking at the same thing at the same time, without the need for waiting until they’re done – making life much easier for you and them.
6. Making Tax Digital
MTD applies to VAT-registered companies, LLPs, unincorporated businesses and charities who have a taxable turnover above the VAT registration threshold of £85,000 per annum. If you fall into this category, all of your tax records must be stored digitally for VAT purposes only, plus you must also send all of your VAT return information via MTD ‘functional compatible software.’ Use of MTD compatible accounting software and an accountant to manage MTD for you cover all this.
What are your options moving forward?
If you’re currently using or considering using a spreadsheet, ask yourself whether it’s worth the risks highlighted in this blog. Do some research into the different options out there to find an online accounting solution that suits your needs best, preferably one that includes the expertise of a personal accountant.
With both the support of an online accounting system plus the expertise of a dedicated personal accountant, you’ll have the perfect solution for your contractor accounting needs.
Also worth reading – our guide to the best online accountancy software offerings.