Spreadsheets are perfect for some numerical tasks, but managing your small business accounts is not one of them. With new rules on digital record keeping and tax submissions coming into play early next year, how confident are you that your Excel accounting spreadsheet can keep you in line with the law?
And it’s not just the law that you have to worry about! Even the most complex accounting spreadsheets are prone to errors, have a constant need for care and attention and are unable to execute some of the most basic tasks of accounting software. As a hard-working business owner you really owe it to yourself to wave your beloved spreadsheet goodbye and welcome in a modern accounting system that can help you see the big picture, relax about tax and nail the daily admin.
Here are our top five reasons why you should look to switch from spreadsheet accounting as soon as you can:
1. Tax is changing
There has never been a more pressing time to ensure that the systems you use to manage your business accounts are up to scratch. HMRC’s Making Tax Digital initiative rolls out from April, when businesses above the VAT threshold will be required to store financial records and submit VAT returns using HMRC-recognised accounting software.
While spreadsheets can be compliant with parts of the new legislation, this is only if they’re combined with specialist bridging software that enables the relevant data to be passed on to HMRC. However, with most bridging software, the onus will still be on you to find a compliant way to store all your business’s financial data digitally. One way or another, if you’re still using spreadsheets for bookkeeping and accounting, it’s likely that you’ll have to overhaul your systems at some point over the next few years.
A simpler solution is to switch to tried and tested accounting software, like FreeAgent. We’ve been working closely with HMRC to ensure our systems are MTD-ready, and we’ve already made our first successful MTD for VAT submission!
Take a closer look at MTD-compatible VAT filing in FreeAgent to see how it will work for your business.
2. Spreadsheets lack the power that modern small business accounting requires
We’ve mentioned that you can file your VAT return directly to HMRC from FreeAgent, but that’s really just a tiny part of what sets the software apart from spreadsheets. Here’s a quick comparison:
|Record money in and money out|
|Create, send and automatically chase invoices|
|Take photos of receipts and upload as expense figures|
|Manage all invoices, expenses, bank accounts in one place|
|Track the time you work|
|Automatically import bank transactions|
|Dedicated UK-based support by phone and email|
|File Self Assessment tax returns direct to HMRC|
|Automatically generate VAT returns and file direct to HMRC|
With our team of engineers constantly adding to the functionality of the FreeAgent app, there’s really no way that your spreadsheet can keep up. Take a look at FreeAgent’s feature overview for a full picture of the possibilities of using accounting and bookkeeping software for your business.
3. Spreadsheets can be wrong
Spreadsheets are prone to error – and there have been some whoppers in recent times! In 2012, an error in a spreadsheet formula caused JP Morgan to lose £6 billion. Another famous spreadsheet error led to the organisers for the London Olympic games overselling a swimming event by 10,000 tickets.
The moral of these spreadsheet horror stories is that mistakes are easy to make and not always easy to catch or rectify. Is it really worth the risk of using a simple bookkeeping spreadsheet for something as important as your small business accounts?
4. Spreadsheets can’t help you when they go wrong
When your spreadsheet template isn’t working, you’re on your own. Finding and fixing errors can be an annoying time-drain when you're trying to get on with running your business. However, when you have a problem with your accounts in FreeAgent, our superhero support team and library of user guides and how-to videos are on hand to help you get back on track.
5. You might fall in love with accounting software
Still not convinced? Here are a few lovely things that FreeAgent customers have said since switching to FreeAgent:
"Phew! Finished the quarter's accounts and VAT. Thanks @freeagent for making it much easier than with spreadsheets!" @PennyPullan
"Credit where credit is due: @freeagent is amazing software that turns tedious accounting into a joy" @dmitrigrabov
"VAT return done. One minute job. Thank you @freeagent" @mikercameron
Disclaimer: The content included in this blog post is based on our understanding of tax law at the time of publication. It may be subject to change and may not be applicable to your circumstances, so should not be relied upon. You are responsible for complying with tax law and should seek independent advice if you require further information about the content included in this blog post. If you don't have an accountant, take a look at our directory to find a FreeAgent Practice Partner based in your local area.