A very common question on business forums is from new business owners and sole traders just starting out asking if they need a bookkeeping package, and if so which would be the best for them.

The best advice I can give you if you are starting out on your own is keep good records.  If you are not financially with it yourself then keep all those fiddly bits of paper and ask for help from someone who is.  If you keep good records then you have won the first battle, and those receipts and records can be used to create your tax return, company return, or management reports to present to the bank.

The other tip which will help keep for business finances much easier to track is keep your personal and business transactions separate.  If you can start up a new bank account especially for your business, or if like me you have in the past had credit card companies falling over themselves to offer you a card, try and keep one for the business separate from your day to day household expenses.  It will make your life (and that of your future bookkeeper) much easier in the long run.

Make sure you get your invoicing right from the start, as even if you have the best business idea in the world, if you don’t produce accurate and effective invoices it will be very hard to get paid .  Certain information must appear on an invoice, take a look at  ‘What needs to go on an Invoice?’ for details.

Spreadsheet or Accounts Package

Many people just starting out don’t think they are big enough to warrant the purchase of an accounts package and start out using excel spreadsheets to record their business finances.  My personal view is that you are never too small to start using an entry level package, like Sage One or Sage Instant Accounts.  It’s always best to start by using the correct tools for the job,

In my experience using a spreadsheet is fraught with potential problems.  There is no real way of checking easily for errors, omissions and duplication on a spreadsheet, and in my experience even trying to check that everything from your bank statement has been accounted for can take hours with even the best designed sheets.

In my years as a bookkeeper I have seen invoices raised in word processing packages with incorrect VAT calculations, missing invoice numbers or duplicated numbers, and no system for keeping track of who has paid and who still owes you money.  Even the entry level packages offer this kind of control as standard depending on the package you choose.

If you are busy doing the work but not being paid for it then you will be working harder and harder just to stand still. Start as you mean to go on with a package designed for the job, after all I am sure you plan to be successful in your business and you will soon grow.

Choosing the Right Package

You need to think carefully about which is the right package for you.  Many have a free trial option so you can ‘try before you buy’, or you can ask for a demonstration of the different packages too.

Cloud or Desktop

The latest buzz word is cloud accounting, with packages like Xero and Sage One becoming very popular.  Do you have a good reliable internet connection?  Do you need to be able to view your accounts when you are out of the office on multiple machines? Do you need your accountant or bookkeeper to have access to your live accounts in order to support you in your business?  Cloud really just means  your data is stored on a third party machine and you access your software via a browser window.  Data is encrypted and password for security, but I would recommend caution in logging onto your financial data on ‘public’ machines.

Sage 50 is a  traditionally desktop accounts packages.  You install the software on a machine or server and then access it from within your private network. The latest version does have a cloud capability though.  Rather than logging in remotely to your software using a browser you are able to install the software on a machine away from your main office or network and access live data remotely.  Your accountant if they have the Sage Bureau License can also access your data live.  There are mobile apps too for you to be able to view your customers and suppliers accounts live too using the tracker app.

I would only recommend relying on cloud based solutions if you have reliable internet services, think about how it would impact your business if you lost connection to your accounts data for a large part of the day. Hopefully as fibre is rolled out throughout the UK this will become less of an issue, but we are not quite there yet.

Sage One, Sage 50 or Xero?

Silicon Bullet are able to advise which product would be the best for you needs.  You need to think about if you need to do VAT returns, do you need to raise invoices*, how about quotations, sales order processing, purchase orders, managing stock and even tracking projects.  We have a huge range of packages to suit every pocket from £5 per month up to multi user full accounting management systems costing several thousand pounds..

There are too many choices to list here in this blog, but we’d be happy to spend an hour with you finding out about your business and helping you make your decision free of charge.  The systems we recommend can grow with your business, adding more features as you need them and helping you run a successful business.

• If you would like a copy of my informational factsheet “10 Things to Consider about Invoicing and Accounts when Starting your own Business” then email us at sage@siliconbullet.com .