Excel and accounting software can both be used when it comes to accounting. Your unique needs and the size of your business will determine which option you choose.
Spreadsheet software like Excel is widely used and reasonably simple to use. Small businesses or individuals with straightforward accounting requirements may find it to be a good option. You can create and organise financial data, as well as carry out simple computations and analyses. For substantial or intricate accounting tasks, it might not be the most effective choice.
While capable of handling a variety of financial tasks, such as invoicing, payroll, inventory management, and tax reporting, dedicated accounting software is created specifically for accounting. Particularly for bigger businesses with more complex accounting needs, it can be more accurate and efficient than using Excel. Dedicated accounting software can, however, also be more expensive and use effectively requires more training.
In general, Excel can be a good option if your company has relatively straightforward accounting needs and you feel at ease using spreadsheets. However, it might be worthwhile to spend money on specialised accounting software if your company is larger or your accounting requirements are more complicated. Let's talk about the differences and how to pick the best accounting strategy for your small business.
The following are the benefits of using Excel for accounting:
Excel's downsides as an accounting tool are as follows:
Overall, Excel can be a good option for small businesses or individuals who need a flexible, affordable, and user-friendly solution for their basic accounting needs. However, dedicated accounting software may be a better option for larger companies or those with more complex accounting requirements to lower the risk of errors, improve data security, and provide more scalability and integration.
The advantages of using accounting software for bookkeeping include:
The following are the disadvantages of using accounting software for accounting:
Overall, using accounting software has many benefits over using Excel or other spreadsheet programs. Though it might be more expensive, it might also cost more to use effectively, need some training, and be more prone to technical problems and upkeep needs.
Why is MTD important and what is it?
Making Tax Digital (MTD) is an initiative of the UK government to digitise the tax code and make it simpler for businesses to manage their taxes. Businesses must maintain digital records of their VAT transactions and submit their VAT returns using MTD-compatible software under MTD.
You must adhere to MTD for VAT if your company is registered for VAT and has a taxable turnover above the VAT threshold (currently £85,000). The implication of this is that you must maintain digital records of your VAT transactions and submit your VAT returns through MTD-compatible software. You must also confirm that the software you use can communicate with HMRC's systems.
Businesses must electronically submit their quarterly VAT returns in accordance with MTD for VAT reporting. MTD VAT returns must be submitted by the same deadlines as non-MTD returns, which are one calendar month and seven days after the conclusion of the applicable VAT period.
It is crucial to remember that MTD for VAT is currently only applicable to VAT-registered businesses with a taxable turnover above the VAT threshold. MTD is, however, anticipated to be expanded to include additional taxes in the future, including income tax and corporation tax.
More information about MTD VAT is in the article “Make Tax Digital: online filing of VAT returns”.
What accounting programs are MTD compatible?
Numerous accounting software support MTD, for example:
Make sure the accounting software you select is MTD-compatible and can interact with HMRC's systems. Finding the software option that best fits your company's needs and budget requires research and comparison of various software options. The accounting team at Persona Finance advises using Xero because it is the most straightforward and user-friendly program for many businesses.
Excel can be used by businesses with minimal financial data and fairly straightforward accounting requirements. Excel is a good option for small businesses or individuals who need a basic accounting solution because it is adaptable, affordable, and widely accessible. Accounting software is made to handle large amounts of financial data and automate processes, ensuring accuracy and lowering the possibility of errors. Additionally, accounting software provides improved security and software integration.
Making Tax Digital (MTD) for VAT, which mandates the use of MTD-compatible accounting software for VAT reporting, is a requirement for businesses that are registered for VAT in the UK and have a taxable turnover above the VAT threshold. Therefore, accounting software is a MUST if your company makes more than £85,000 a year, expects to make more, or desires to claim back the VAT. Persona Finance offers accounting support packages that come with free accounting software, which is worth more than £40. We would be happy to speak with you about the possibility of working together because we're committed to providing our customers with the best service possible. Please contact us for more information via the website or email enquiries@personafinance.co.uk .
Spreadsheet software like Excel is widely used and reasonably simple to use. Small businesses or individuals with straightforward accounting requirements may find it to be a good option. You can create and organise financial data, as well as carry out simple computations and analyses. For substantial or intricate accounting tasks, it might not be the most effective choice.
While capable of handling a variety of financial tasks, such as invoicing, payroll, inventory management, and tax reporting, dedicated accounting software is created specifically for accounting. Particularly for bigger businesses with more complex accounting needs, it can be more accurate and efficient than using Excel. Dedicated accounting software can, however, also be more expensive and use effectively requires more training.
In general, Excel can be a good option if your company has relatively straightforward accounting needs and you feel at ease using spreadsheets. However, it might be worthwhile to spend money on specialised accounting software if your company is larger or your accounting requirements are more complicated. Let's talk about the differences and how to pick the best accounting strategy for your small business.
The following are the benefits of using Excel for accounting:
- Flexibility: Excel is a flexible program that can be tailored to meet particular accounting requirements;
- Familiarity: Excel is widely used, so there may be less need for additional training due to familiarity;
- Accessibility: Excel is easily accessible to a wide range of users because it is widely available and compatible with both Mac and Windows operating systems;
- Affordability: Excel is reasonably priced and may already be included in your computer or software purchase;
- Basic Accounting Functions: Basic accounting operations, including the creation of balance sheets, income statements, and cash flow statements, can be carried out using the functions and formulas that are already included in Excel;
- Analysis and Reporting: Excel's pivot tables and charts make it simple and quick to analyze and produce reports on financial data.
Excel's downsides as an accounting tool are as follows:
- Limited Scalability: Excel can become slow and cumbersome when working with large amounts of data, making it less suitable for larger businesses or complex accounting requirements;
- Error-prone: Excel is prone to errors because it relies on hand-written formulas and manual data entry, which makes it more likely for mistakes to occur, especially when handling large amounts of information or intricate calculations;
- Security: Your financial data may be at risk from Excel files being easily modified or deleted;
- Version control: It can be challenging to keep track of various spreadsheet versions, which can cause confusion and mistakes;
- Lack of Integration: If you need to share data with other departments or software systems, Excel may not work seamlessly with other software programs;
- Time-consuming: Creating and maintaining spreadsheets can take a lot of time, especially if you need to repeat the same tasks frequently.
Overall, Excel can be a good option for small businesses or individuals who need a flexible, affordable, and user-friendly solution for their basic accounting needs. However, dedicated accounting software may be a better option for larger companies or those with more complex accounting requirements to lower the risk of errors, improve data security, and provide more scalability and integration.
The advantages of using accounting software for bookkeeping include:
- Scalability: Accounting software is suitable for larger businesses because it can manage large amounts of data and complicated accounting tasks;
- Automation: Repetitive tasks like billing and financial reporting can be automated by accounting software, lowering the chance of errors and saving time;
- Accuracy: Accounting software reduces the possibility of errors, ensuring accurate financial data;
- Integration: Accounting software can easily integrate with other software applications, making data sharing between departments and software systems simple;
- Security: Accounting software provides improved data security, such as data encryption and access controls, lowering the risk of data breaches;
- Customisation: Accounting software can be tailored to meet particular accounting requirements, including the ability to create personalized charts and reports.
The following are the disadvantages of using accounting software for accounting:
- Cost: Compared to using Excel or other spreadsheet programs, accounting software can be more expensive;
- Learning: Accounting software may require some instruction to use proficiently, especially if it is a complex program with numerous features;
- Technical Problems: Software crashes and data corruption are two examples of technical problems that can occur with accounting software;
- Maintenance: To ensure that accounting software continues to operate correctly, it may need regular updates and maintenance;
- Lack of Flexibility: Some accounting software programs may be less flexible than using Excel or other spreadsheet programs, restricting customisation options.
Overall, using accounting software has many benefits over using Excel or other spreadsheet programs. Though it might be more expensive, it might also cost more to use effectively, need some training, and be more prone to technical problems and upkeep needs.
Why is MTD important and what is it?
Making Tax Digital (MTD) is an initiative of the UK government to digitise the tax code and make it simpler for businesses to manage their taxes. Businesses must maintain digital records of their VAT transactions and submit their VAT returns using MTD-compatible software under MTD.
You must adhere to MTD for VAT if your company is registered for VAT and has a taxable turnover above the VAT threshold (currently £85,000). The implication of this is that you must maintain digital records of your VAT transactions and submit your VAT returns through MTD-compatible software. You must also confirm that the software you use can communicate with HMRC's systems.
Businesses must electronically submit their quarterly VAT returns in accordance with MTD for VAT reporting. MTD VAT returns must be submitted by the same deadlines as non-MTD returns, which are one calendar month and seven days after the conclusion of the applicable VAT period.
It is crucial to remember that MTD for VAT is currently only applicable to VAT-registered businesses with a taxable turnover above the VAT threshold. MTD is, however, anticipated to be expanded to include additional taxes in the future, including income tax and corporation tax.
More information about MTD VAT is in the article “Make Tax Digital: online filing of VAT returns”.
What accounting programs are MTD compatible?
Numerous accounting software support MTD, for example:
- Xero;
- QuickBooks Online;
- FreeAgent;
- Sage Business;
- KashFlow;
- ClearBooks;
- TaxCalc
Make sure the accounting software you select is MTD-compatible and can interact with HMRC's systems. Finding the software option that best fits your company's needs and budget requires research and comparison of various software options. The accounting team at Persona Finance advises using Xero because it is the most straightforward and user-friendly program for many businesses.
Excel can be used by businesses with minimal financial data and fairly straightforward accounting requirements. Excel is a good option for small businesses or individuals who need a basic accounting solution because it is adaptable, affordable, and widely accessible. Accounting software is made to handle large amounts of financial data and automate processes, ensuring accuracy and lowering the possibility of errors. Additionally, accounting software provides improved security and software integration.
Making Tax Digital (MTD) for VAT, which mandates the use of MTD-compatible accounting software for VAT reporting, is a requirement for businesses that are registered for VAT in the UK and have a taxable turnover above the VAT threshold. Therefore, accounting software is a MUST if your company makes more than £85,000 a year, expects to make more, or desires to claim back the VAT. Persona Finance offers accounting support packages that come with free accounting software, which is worth more than £40. We would be happy to speak with you about the possibility of working together because we're committed to providing our customers with the best service possible. Please contact us for more information via the website or email enquiries@personafinance.co.uk .
