Accounting software for sole traders can help them count victory. Yet, getting them is still your choice.
With several options in the market comes a question, which software is best for sole traders? We have a few names on top of the list with different features, price packages, and benefits to share with you. They help you optimise business from basic invoicing and billing to saving business financial data, reconciling bank accounts, and tax preparation.
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What is accounting software?
Accounting software for sole traders manages their daily financial transactions and records them accordingly to keep books organised.
It includes managing their fixed assets, expense, revenue, accounts receivable and payable, business liabilities, and reporting and analysing reports.
This information helps owners to create general ledgers in real-time, providing valuable insights into the profit and loss and cash flow statements.
It is an invaluable resource for modern businesses that eliminate paperwork and manual tasks. Such software allows storing numerous data without taking up your physical space and is a cost-effective accounting option.
Accounting software enables easy access to information that helps complete audits, evaluate previous information, keep track of your financial situation, and help during tax investigations.
What are the essentialities of using accounting software?
Using accounting software in businesses comes with numerous benefits. We have listed a few below:
Invoicing and billing
The primary source of cash flowing into business includes invoicing and billing. Managing bills and invoices on paper are time-consuming and error-prone. Tracking invoices and reminding customers of pending payments is another difficult task for businesses.
Accounting software solves these issues effectively by providing easy invoicing features, creating recurring profiles for regular customer orders, scheduling invoices, sending reminders on payment dues, etc.
Collecting payments from your clients can be overwhelming if you don’t offer a proper payment system. Integrating your accounting system with different payment gateways can offer clans to pay use swiftly and securely. Plus, these gateways help you keep a record of payments and update the transactions in the accounting system automatically. They also support multiple currencies and remove discrepancies and additional calculations for foreign transactions.
You must have a good grip on your cash flow which mandates the need for tracking expenses. Accounting software keeps a tab of your expenses and helps you categorise them to understand where your money is going. They allow you to upload expenses, scan them and record information automatically, removing the need for physical paper storage and the risk of losing them.
Bank reconciliation is one of the core accounting requirements for business, and accounting software helps you streamline the process.
You can connect bank accounts directly from your software to automatically fetch statements from bank feeds and update their interior accounts.
You can create customised requirements and bank rules in your software to categorise and match different bank transactions automatically. Once these transactions match, you can verify and confirm reconciliation with your accounts.
Good accounting software is designed to follow local and federal tax regulations. It reduces the chance of tax investigations paying the right tax, works with multiple tax rates, calculates tax faster, and provides error-free calculations. They provide tax, understand your taxes, organise, and are ready during tax season.
Financial report generation
It is essential to check your business growth and make the right decisions to maintain good health. Accounting software helps to generate reports mentioning your financial trends and analysing growth patterns.
The inbuilt reporting features of such software help you analyse cash flow, general profit and loss statements, and balance sheet reports. Besides these primary statements, the accounting system helps you automatically compile core business information like sales, taxes, purchases, projects, and inventories.
If you are adopting cloud accounting solutions, you can develop wise accounting habits. Why? They allow you to access data anytime and anywhere using a proper device with internet connectivity. Plus, they are scalable, offer data security, are flexible, etc.
Top five accounting software for sole traders
There are numerous options available in the market for sole traders. These come with different features and advantages that may or may not fit your business. Therefore, you must consider business needs initially before getting the right software.
Here are the top five accounting software for sole traders:
- QuickBooks Online
It is one of the best overall accounting software for small businesses. Quickbooks online typically provide professional accounting features but have endless online training resources and forums to support you when needed. It is a cloud-based application that integrates third-party apps, offers a 30-day free trial, and has several features.
Xero is simple accounting software that integrates with third-party payroll services and payment integration with stripe and GoCardless.
Micro businesses highly review this software. It is a cloud-based mobile application with a simple and user-friendly platform.
The cloud-based application FreshBooks offers numerous features, from invoicing to fulfilling basic bookkeeping needs, tracking project time, receiving payments, sending proposals, third-party app integration, etc. It offers a user-friendly platform and is famous for invoice customisation features.
Wave is popular for service-based small businesses to prefer sending simple invoices and don’t run payroll. The free features of the software cover most of the accounting needs.
There are no transaction or billing limits, unlimited user access to running multiple businesses from one account, free accounting invoicing, and received scanning with Wave.
Sage Business Cloud Accounting is best for sole traders without an accounting background. You can set up the system quickly and get help from Sage’s 24/7 online and phone support system. The best package will fulfill most of the nails for sole traders, including VAT return calculations, creating and sending invoices, reconciling bank accounts, and tracking payments.
Accounting software is not an alternative to accountants. However, they can fulfil the initial accounting needs of small businesses.
When the business starts expanding and finances get complicated, seek professional advice. No matter what, sole traders need to stay on top of accounting besides running their business and satisfying clients.