A few swipes of the screen, a press of a button, and it’s done. That’s how many accounting software providers tend to advertise their product – a miracle solution to getting your accounts done and getting great insights, without having to hire an accountant.
These adverts always bother me. That’s not because I don’t believe in the power of accounting software to save hours of time for business owners. Compared to more manual accounting methods, or even using older desktop software, cloud accounting is an incredible tool to get your books in order quickly and efficiently.
In fact, we at Mayflower encourage all our clients to get on board with the latest accounting tech and eliminate those tedious, repetitive bookkeeping jobs.
The problem is that people sometimes overestimate how much a piece of software can do.
What accounting software can do
Most accounting software tools are able to carry out the basics of bookkeeping – and complete several tasks faster than a human ever could.
By integrating with bank feeds, payment software and expenses apps, your software can record and reconcile transactions, although you’ll generally need to approve the information it matches up.
Software can also produce accounts from that data, creating balance sheets, profit & loss and so on, based on templated reports.
Increasingly, software tools are also able to transfer data to HMRC under the Making Tax Digital programme, allowing you to file tax returns directly through the system.
What accounting software can’t do
All of this means time and effort saved for business owners, but there are limits to what your software can do. Ultimately, this is because it doesn’t have the years of experience and training an accounting professional has.
When you rely heavily on automation, it becomes even more important to have an experienced and knowledgeable person managing the process – someone who knows what a problem looks like, and can resolve it before it gets worse.
If you don’t have the right level of accounting knowledge, you might miss crucial details that could indicate a software or process error. Left unchecked, this could spiral into a bigger problem for your business or an issue with HMRC.
Besides this risk, if you rely on software alone, you’re also missing out on important insights that could be drawn out of the data in your accounts.
A good accountant will be able to collaborate with you through accounting software, applying their detailed knowledge of tax law and their experience working with other businesses to advise you on the best options when it comes to tax planning, reliefs and more.
They’ll also be able to give you broader strategic business advice, helping you to work towards your business goals. After all, running a business isn’t just about meeting the basic requirements of tax law – it’s about developing, achieving your ambitions, and finding new and better ways to work.
An accountant will be able to work with you on these goals, provide honest and informed opinions, and draw the details from the data to help you make the best decisions for your business. That’s something accounting software alone just can’t do.
Get in touch for forward-thinking accountancy advice.