Whether you are just starting out or growing rapidly, you will face the task of having to decide on how you manage your accounts. It used to be that employees who ‘kept the books’ slaved over a ledger and their pencil was their weapon of choice. You would rely on this member of staff to make the right calculations but there was always the potential for human error, no matter how good your finance team were.
In the digital age, as with most other things, this potential for errors has been reduced with the introduction of a digital offering of business accounting software. The inclusion of a software has become vital to small businesses following the introduction of Real Time Information (RTI) legislation. RTI has been one of the biggest legislations to effect the tax system in nearly 70 years. Prior to this, in 1944, Pay As You Earn (PAYE), a system in which tax and national insurance deductions are made each pay period, was implemented as a way to finance the war whilst keeping control of inflation. The introduction of PAYE also allowed for a more efficient tax system as opposed to the annual and half-yearly tax collections.
The tax system was designed when it was common place for people to have one job that they remained in for the vast majority of their life and, as a result, reporting was still on an annual schedule. This has now changed dramatically with people changing jobs more frequently, and many having multiple employments. Not only this, but many employees will also have a number of pensions as well as complex benefits, expense packages and student loans that need to be accounted for when they are paid.
This ease of mobility between workplaces initiated the introduction of RTI to aid in improving the efficiency of PAYE submissions. The new and improved way of reporting requires employers to submit PAYE information to HMRC each time they pay their employees instead of once a year at Payroll Year End as it has been done previously. The rapid change that occurs on market and society causes periodic reporting to become quickly outdated and so it has been necessary to develop technological tools that aid in the implementation of RTI accounting.
Paul Feist, Managing Director of Plus Accounting says that “today’s tech savvy business owners are not content to wait for financial reports to be given to them days or weeks after the event. They require accurate, real time information so that they remain continually in control of their finances and their businesses. They require 24-hour access to key financial data because having immediate access to data, information and news is how they now run their lives. In order to meet this demand, a number of innovative software packages have evolved.”
breatheHR is one such tool that offers a payroll export detailing any changes made to an employee profile. This includes any address information, updated salary information and updated bank details, for example. The self-service software arms employees with the ability to manage their own HR tasks and this includes ensuring that their information remains up to date, meaning that the onus isn’t on the business owner or accounts teams to do so. The export, containing all of the updated information, can then be passed to the accounts team for their PAYE submissions.
It goes without saying that, as with most things, the progression of accounting procedures to a digital platform is necessary due to the introduction of RTI legislation. The use of software allows you to easily provide a snapshot in time of your accounting information needed for PAYE submissions. With all of the above considered, do you think that implementing a business accounting software within your company would be worthwhile? If the answer is yes, take a look at our guide to the best accounting software for medium-sized businesses.
