13% of bookkepers in Australia still offer a manual bookeeping service, according to one survey. For some businesses, there's nothing wrong with sticking with paper or an Excel spreadsheet, but if you've never used accounting software, what are you missing out on? We asked Debra Anderson of MYOB specialists Legally BAS to explain what accounting software can do.
One of the most common questions I’m asked is when should I move from Excel to accounting software? My answer is quite simple - when you can’t quickly and easily manage the day-to-day business using Excel then it’s time to move. Trust me, if you’re there, you’ll know it.
Everyone’s skill level with Excel is different, but basically Excel is a great, cheap and easy solution when you’re just starting, but as soon as you need to manage several customers’ outstanding invoices or you start employing people that’s when things start to get really tricky. Then there’s the stage where you’re busy but you’ve got no money and need to understand where it’s all going. All of these are good indications it’s time to move to accounting software.
So what can accounting software do for me that I can’t do in Excel?
1. It can take care of entering your bank and credit card transactions
These days most accounting software packages can link to your bank and credit card accounts, meaning that the old days of doing hours of data entry are officially over. Overnight, your bank transactions can be pushed into your accounting software and with minimal effort by you the majority of your transactions can be automatically allocated for you or in some cases even allocated to outstanding customer invoices.
Software such as MYOB LiveAccounts has rules that once set you never have to deal with that transaction type again. For example, if you enter a rule that says when the word ‘parking’ appears on my credit card allocate it to the expense account for ‘parking’ then anytime it sees the word ‘parking’ within a credit card charge, the software will automatically allocate it for you – done, dusted, you never have to worry about allocating parking charges again.
Once all your transactions are in the software, with the press of a couple of buttons you can quickly and easily produce your Business Activity Statement in a format you can easily transcribe onto the ATO form, or in some cases your BAS can be lodged directly from within your accounting software to the ATO.
2. Easily produce a profit and loss report
Accounting software is specifically designed to produce a variety of different reports to help you run and manage your business. A favourite of mine is the Profit & Loss report which shows you what your income and expenses are for a selected period and whether or not you are actually profitable or not.
As with most things, this is only as good as the information in the system, so having the live bank feeds mentioned earlier makes this even simpler. Now with minimal effort you can track how your business is going as often as you want – even daily if you’re keen.
3. It makes sure you're paying staff the right amount
When it comes to payroll Excel can’t compete with accounting software. Payroll is much bigger than just paying someone every week. There are rules about payslips, leave entitlements need to be managed and let’s not forget superannuation and PAYG withholding taxes.
Using a software package such as MYOB LiveAccounts can help you ensure that you are paying the correct amount to your employee, taking out the correct amount of tax by always having up to date tax tables and now with superannuation changing every few months it ensures you are paying the right amount of superannuation.
4. It helps prevent you paying more superannuation than you have to
Most people don’t realise that you don’t need to pay superannuation if employees earn less than $450 per month – by using an accounting package these parameters are usually already built in so you aren’t paying more than you need to.
5. No more hand writing ATO payment summaries
Best of all, they also produce your payment summaries, so no more hand writing ATO payment summaries.
Debra Anderson has over 20 years of accounting experience and is a highly respected, senior Certified Consultant within the MYOB community. In 2006 she established Legally BAS, a nationally recognised bookkeeping and MYOB consultancy. She is frequently consulted by MYOB on the potential of the cloud computing space for bookkeeping and accounting best practice and has been nominated as Telstra’s “Business Woman of the Year”, in addition to Legally BAS being nominated as “Small Business of the Year”.
Not sure if you need MYOB or QuickBooks Online? Click here to see our special guide.