Many small businesses and start-ups begin their accounting journey using Excel spreadsheets. And that's fine, up to a point. But there comes a time when spreadsheets are no longer suitable for more complex tax and financial management processes.
According to www.gsmaccountants.co.uk, Excel is a readily available, robust and versatile application, but the spreadsheets you create with the program are not always reliable. Many contain errors, and these errors are often compounded as spreadsheets are reused monthly or yearly. Businesses now rely on online software to help.
Here’s why it makes sense to move to accounting software packages.
1. Excel is Complicated
Using Microsoft Excel for anything other than simple recording and calculations is difficult. You need to know the language of Excel. This is a skill many people think they have, but they actually don’t possess. Overestimating Excel ability is one of the ways businesses get into trouble with their accounts. It takes someone with expertise to manage Excel for accounting purposes. On the contrary, you don’t need specialist knowledge to use an online accounting package.
2. Using Excel Correctly Takes Time
Setting up a spreadsheet fit for accountancy purpose takes a lot of time. It needs careful thought and planning. It is also time consuming to create expense reports and set up tracking for invoicing. Changing information on a spreadsheet is also a significant time drain. You probably don't have the spare time to spend on these tasks, which is why software (which is more intuitively designed) is a sound choice.
3. You Need to Know Your Strategy
In order to set up a spreadsheet, you need to know how you will use your data. You won’t be able to configure a use for the data after you’ve entered it. So, you must know exactly how your reports will come out before you start. Online software offers greater flexibility. Use the data you input in a variety of ways depending on your needs as they occur.
4. Excel Spreadsheets are Open to Misuse
It is simple to change the information in a spreadsheet as there is no audit trail. It is difficult to track who makes the changes in a document. Changes could be made in error or fraudulently; either way it could cost your business considerably, in legal fines and reputational damage. A robust software package limits your exposure to these risks.
5. Excel Can’t Integrate With Other Apps
An accountancy software package allows multiple apps to run together, combining large amounts of data and integrating functions that keep your company running smoothly. Excel is just a spreadsheet system. It is not joined up.
You don’t have to take on all your accounting tasks yourself. Using accountancy software is a step up from Excel, but there is no substitute for working with a professional accountant. The best accountancy relationship for small businesses often involves a combination of online tax software and in-person consultancy to create the ideal financial management conditions for the small business.