Bookkeeping software

Bookkeeping software usually come with features which allow you to prepare VAT returns, management reports and your company accounts.

Choosing the Software

Depending on your business activities and bookkeeping requirements, a startup company may only require simple and straight forward bookkeeping software for recording business transactions. You can always upgrade your bookkeeping software to more sophisticated bookkeeping software as your business expand.

If you have different companies under your management. In this circumstances, a bookkeeping software with multi-company with multi-users license may be ideal.

Choosing suitable bookkeeping software can be time consuming and with the sweet talk from all software retailers could create confusion for you which software is the best suit your business accounting requirements. Always ask for a software demo or free trial the software for a period of time.

Generally, a good bookkeeping software comes with the following features.

Nominal ledger

Nominal ledger is where all the assets, liabilities, income and expenditure of your business are recorded.

Sales ledger

The list of customers who owes money to your business. The software will also be able to prepare monthly statements detailing the outstanding amounts. Some software has the facility to prepare and send a standard letter of reminders chasing payments due from customers.

Invoicing

Most software allows you to create a sale invoice. Every sale invoice created in your software shall automatically posted to your sales ledger.

Stock control

This is a stock management system allows you to monitor your stock level and keep track of your stock movement. If you are suppliers of building materials you may use stock control to monitor your materials in stock. As you purchase new stock they are added to the stock records. When a sale invoice is created it automatically reduces the stock items sold.

In this manner you can quickly establish if an item is out of stock and you know your cost of your stock. You are able to set standard profit margins which automatically update the selling price of materials based on the purchase price.

Purchase ledger

The summary of your suppliers that you still owes money to.

Order processing

This feature allows you to record orders from customers. It will allow you to create a quote, pro-forma invoices and the reservation of stock so that the items will be available at the appropriate time. You can then track them through, from producing a dispatch note and an invoice at the appropriate time.

Job costing

Allows you to work out the cost of a particular job that you are undertaking for a customer. As you enter the components used, the software calculates the cost of the items and the stock record automatically updated. Job costing can be useful in the calculation how much to bill your customers.

Payroll

Some software will support the calculation of wages and salaries for your employees and also work out the correct amount of income taxes and national insurance contribution payable to tax office.

Multi company license

This license facilitates the software to process the records of more than one company or business on the same access.

Multi user license

This license is ideal for larger businesses with a computer network which allow several users to have access to the same bookkeeping software at the same time.

Batch or real time input

Process transactions by batches. This can have advantages in that if your transactions are pre-listed and you have reconciled each batch. The batch remains open for the current month and it is only transferred to the nominal ledger at the end of the month. The disadvantages of such a system is that it is not possible to obtain meaningful interim reports until the batch is processed at month end. By contrast on a real time system each invoice is posted to the nominal ledger as it is entered and although this means that there are more ledger entries made automatically it means that the ledger is always up to date.

Password protection

Most bookkeeping software have some sort of passwords protection. You can have a global password for your software for every user or you can have a different password for each user. You can set different access rights for each user, for example, your sales department may have access to the sales programs but unable to access the nominal ledger or purchase ledger.

There are many bookkeeping software available for UK businesses such as Clearbooks provide online bookkeeping, VAT return, payroll processing and company accounts submission service. Other bookkeeping software include Xero, Sage, QuickBooks, Viztopia, Kashflow and so.

Vocabulary used in financial statements

Understanding vocabulary used in the financial statements will help you to understand the report and figures presented in your company accounts.

Below are frequently used vocabulary you see in your financial statements and company accounts.

Accounts

Basically, Accounts are normally consists of profit and loss account, balance sheet, notes to financial statements and directors report. For companies registered in the United Kingdom, the accounts must comply with the Companies Act 2006.

Asset

Asset is anything that a business owns. This includes buildings, cash, furniture, and equipment. Generally, tangible assets subject to depreciation or revaluation. And, some of the business is entitled to claim capital allowances in your company tax return.

Audit

Audit is a process of verifying accounting records to ensure completeness and free from material errors. The audit is normally done on samples test basis.

Auditor

Auditor is an individual registered as qualified auditor with the main accountancy bodies to perform statutory audit on your company accounts and financial statements. The Auditor performs the audit must not have conflict of interests in his/her role as an auditor for your company.

The professional accountancy bodies that issue auditing certificate for practitioners include The Institute of Chartered Accountants in England and Wales (ICEAW), the Institute of Chartered Accountants Scotland (ICEAS)or The Institute of Chartered Certified Accountants (ACCA) or other recognized professional bodies in the UK.

Capital

What the business is worth? Capital for limited companies are in the form of shares invested by their shareholders.

Credit

Credit is an entry on the right side of an account ledger.

Debit

Debit is an entry on the left side of an account ledger.

Ledger

A group of accounts of similar types. For example, debtors’ ledger containing the accounts of your business customers and creditors’ ledger containing the accounts of your suppliers.

Liability

Anything that a business owes. For example, mortgage, credit card charges, loans and bank overdrafts under your business names.

Petty cash

Petty cash is a small amount of cash for day to day office small expenses.

Trial Balance

Trial Balance shows expenses on the debits and income and loans on the credits and the ledger are equal. Similarly, it presents the assets on the debits. Liabilities and share equity on the credits.

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