According to recent research, lockdown hasn’t stopped UK startups from attracting funding through investment. There have been especially high levels of activity in the tech sector.
But business growth and success, whether in challenging times or not, also depends on having the right kind of support structures in place.
One such structure is accounting, and for many tech startups, the logical place to start is with accounting software.
But which accounting software is the best for startups?
What Can Accounting Software Do for Your Startup?
Basically, like other software, accounting software offers a dedicated set of tools for the user, to enable them to make their accounting more straightforward and streamlined.
It means you can process financial transactions efficiently and rapidly, and you can automate your accounting, freeing up your time and resources to focus on your core business objectives.
The important thing to note about accounting software is that it isn’t some made-simple alternative just for basic users.
Accounting professionals use accounting software, because they know it’s something they can rely on to deal with:
- Accounts receivable and payable
- Invoicing
- Tax compliance
- Cash flow analysis
- Income and expense statements
- Balance sheets
- Payroll
and more.
What Benefits Can Accounting Software Offer Startups?
In a nutshell, accounting software simplifies accounting:
- It simplifies and speeds up data entry, while helping eliminate human errors in accounting and bookkeeping
- Accounting software saves time in approving invoices and making payments
- It saves on accounting staff costs
- It provides a centralised database of accounting data and keeps it secure
- Accounting software provides ready access to accurate, detailed financial reporting
- It provides a scalable model for business expansion.
For startups already engaged with technology and the opportunities it presents, using accounting software is a logical step and the right fit.
Accounting software is also customisable, so it’s not simply an off-the-shelf solution which companies must adapt to.
Instead, they can adapt it to meet their specific needs, including reports and tax codes.
What is the Best Accounting Software for Startups?
There are plenty of accounting software providers to choose from in the UK. All offer automated accounting support, but they differ in other aspects.
Leading accounting software providers include:
- Xero
- Sage
- QuickBooks
- Fresh Books
- FreeAgent
- Zoho Books
- Kashoo
These are all cloud-based, which means you can access your accounts anywhere, from any device.
Cloud accounting software will update your financial information and provide financial reporting information in real-time.
This means that your account balance should always be accurate, and the system will be able to handle multiple transactions, and even multiple currencies, efficiently.
These services require far less maintenance than on-site systems, and will complete backups of your essential financial data automatically, without you needing to install specialised software on your own business computers or devices.
They also offer secure storage of your financial information, ensuring that it is both encrypted and password-protected.
Using unique passwords, several users at a time can access this secure data, giving you transparency and access when you want it, combined with robust security systems.
How, then, do you choose the accounting software for your startup business?
As we have said, these various platforms will have different types of user interface, and will offer varying degrees of scalability in their services.
It’s important to remember that accounting software is basically a business tool, so you need to understand your business’s accounting needs in order to choose the right kind of tool for it.
Some packages, such a FreeAgent, have the fewest limits on users and features; whereas QuickBooks offers competitive value for money; and Sage is highly scalable.
Here, we’ll look at Xero in more detail, as an example of how accounting software can work for your startup.
How Xero Accounting Supports Startups
Xero streamlines small business accountancy processes, offers flexibility of use with its mobile accounting app, and does this through a user-friendly online dashboard.
With Xero’s dashboard, you can see all your essential financial information in one place, including bank and credit card accounts.
This makes it that much easier to stay on top of your cash flow.
It’s also great for invoice-management, ensuring you’re fully aware of any outstanding invoices, including who owes you what, and how long payments have been outstanding.
With Xero’s dashboard you can also keep a close eye on your spending, as well as your sales, so you always know what’s coming in and what’s going out of your business.
You can also use it to track specific areas of your business, such as transactions or contacts, by customising it.
Cash flow is critical for startups, and with Xero you can get paid faster using its online invoicing software. It makes it fast and easy for you to create and send professional invoices, and to chase payments with its automated invoice reminders.
You can send invoices on the go, via the mobile app, bulk-send them, and set up repeating invoices for regular customers.
Xero will also integrate with third-party apps, including G Suite, Insightly and Float, giving you a comprehensive, cloud-based business management solution.
Outsourced Accounting and Cloud-Based Accounting Software
Remember we said accounting software was a tool to help business startups? One way of maximising the effectiveness of this tool is to have a professional manage it on your behalf.
The possible errors which small business owners can make off the back of “DIY accounting” can be quite daunting. Which is why outsourcing these responsibilities to a qualified accountant who knows what they’re doing, is often a smart move.
Venn Accounts is an official Xero partner. This means we provide all the benefits of Xero accounting software along with our own chartered accounting expertise, to give startups the fundamental financial help, support and advice they need.
Best of all, as a Xero partner, we can offer all clients a 50% discount on subscription for Xero accounting software!
To find out more, give us a call on 020 8088 2590, email enquiries@vennaccounts.com or fill in our contact form, and we’ll be in touch as soon as possible.
