That said, managing your business accounts in the cloud can give rise to a range of technical issues. In contrast to a spreadsheet, cloud-based software takes into account regulatory changes too, such as taxes. This is because the software will do this automatically. In addition, you don’t have to worry about updating or backing up your business data. For example, bank statements and invoices. These types of accounting software offer huge storage space for all your small business’ vital information. Once subscribed you simply sign in, do your bookkeeping and the system will store all your data and generate reports about your business as well as for your filling in your tax returns. Although some are available for free, most are bought through a monthly subscription. Should You Use An Accounting Software?Īccounting software, like Xero, are used and managed via the internet. However, until then you can use a bookkeeping spreadsheet. What these new regulations mean is that if you have a business turnover of £10,000 or more, you’ll be legally required to use approved accounting software for your bookkeeping instead of a spreadsheet. But HMRC is bringing in changes called Making Tax Digital from 6 April 2024. Can Spreadsheets Be Used for Accounting?Ĭurrently, yes spreadsheets can be used for accounting by business owners that are not VAT registered. Consequently, your small business might become too advanced for you to manage your accounting using a spreadsheet, not to mention very time-consuming. As a result, a certain amount of knowledge is needed.īut, perhaps one of the biggest hurdles is that large amounts of data become difficult to manage, particularly as your business grows. Just one mistake could mean you end up missing out on tax relief on your business expenses! In addition, you may need to use complex formulas to create an effective bookkeeping spreadsheet. In turn, this can give rise to human error if the data isn’t entered correctly. This is because you have to manually enter the information into each cell from bank statements, expenses etc. One of the drawbacks of using a spreadsheet for bookkeeping is that it can be a time-consuming way of managing your business accounts if you’re self-employed. That means using a bookkeeping spreadsheet is an easy way to track the vital numbers in your business. All you need to do is change, add or delete specific information and the cells will calculate the data for you. Plus, they don’t need extensive training to learn how to use them. One particular appeal is the fact that they are free or cheap to use. Using a spreadsheet for bookkeeping is a popular choice, especially with the self-employed whose small business finances can be pretty simple. Wrapping Up for Bookkeeping Spreadsheet or Accounting Software
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