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Title : Accounting Software – are accounting spreadsheets the answer for small businesses?
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Accounting Software – are accounting spreadsheets the answer for small businesses?
For many small businesses Simple Accounting Software is hard to find, so could well designed accounting spreadsheetsbe a valid alternative. Could accounting spreadsheets be a match for proprietary accounting software?Accounting Software – are accounting spreadsheetsthe answer for small businesses?
Spreadsheets are widely used and understood by most business people, so it comes as no great surprise that accounting spreadsheets are a popular choice for many small businesses.
All businesses need to keep accounting records; both for compliance and management purposes, and for many smaller businesses, simple accounting spreadsheets are all that are required.
Let’s just outline exactly what essential financial records a small enterprise needs to keep.
If we analyse this, there are four basic requirements:
1. You need to record Bank, Cash and other money transactions. This means a simple analysed listing of Receipts and Payments. These records are collectively known as a ‘Cash Book’, and they need to be correctly added up and reconciled (matched and agreed) to Bank Statements etc.
2. All of your sales invoices to customers and all of your purchase invoices from suppliers will also need to be listed, summed and analysed. These lists are referred to as a ‘Sales Day Book’ and a ‘Purchase Day Book’.
3. You need to monitor and control your monies received against Sales Invoices (Debtor Management) and monies paid to your suppliers in respect of their Purchase Invoices.
4. You need to review, analyse, correct and control these primary records to achieve a basic level of financial reporting and control.
If you can both understand and accurately maintain these basic bookkeeping tasks, then, you are a long way towards achieving a basic level of financial control.
Simple tasks, performed well, and on a timely basis are all that many small businesses require.
There is little need to invest time or money in anything more sophisticated, bookkeeping software can be as simple as this, and the information provided will be of significant financial benefit to the business owner.
The ability to manage these straightforward monthly listings will provide you with a platform to bringing together the 12 monthly worksheets into a consolidated workbook. You will now have a bookkeeping spreadsheet which contains a Cash Book, a Sales Day Book and a Purchase Day Book. You will certainly have sufficient data for the preparation of VAT Returns and rudimentary accounting reports.
If you have reasonable spreadsheet skills you could then progress to a more technical level. All the monthly data can be collated and analysed in different report formats to meet the needs of your business.
Finally, if you have accountancy skills, then Business Taxation, Year End and other Compliance requirements could be built into your system.
However, in my experience most small businesses will to leave this final step to their accountants. So, unless you fully understand concepts such as accruals, prepayments, depreciation, opening trial balances, capital allowances, disallowable expenditure, etc., then leave this final stage to the professionals.
As long as the accounting spreadsheets are well designed; can comply with current VAT requirements; and are fully reconciled, then for many small enterprises and self- employed individuals, accounting spreadsheets are workable bookkeeping solution.
Thus the article Accounting Software – are accounting spreadsheets the answer for small businesses?
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