Years ago, double-entry bookkeeping was introduced, possibly as early as the 12th Century in the Islamic world. At the time of course, computers didn't exist (unless you believe in Aliens!) and so it was all done in written ledgers. Nowadays, there are hundreds (if not thousands) of software packages that promise to simplify your bookkeeping and believe you me, it needs simplifying!
Now, there are some free (open source) bookkeeping packages but most will cost you anything from a few pounds. However, more important than price is what you require from the software and what features it has. If your business is relatively straightforward (perhaps you are not VAT registered and have few customers but high value sales, or perhaps you are a consultant rather than buying and selling goods) then you won't need a software package that has tons of features and costs a pretty penny. However, if your business has a high volume of transactions involving lots of customers, products and suppliers, and you need to keep track of VAT, then your needs will be more sophisticated.
Another factor to take into account is who will do all the data-entry. Will you be doing it yourself or employing someone else to do it? If doing it yourself and you are not a computer expert, you will want something that is simple to use and hides all the complicated stuff behind the scenes. Chances are that if your needs are complex then you will probably employ someone with the requisite skills and they will be familiar with software packages like SAGE.
Another option for the small business is to go online. Software packages such as Kashflow are an ideal choice for the small business owner who is unfamiliar with bookkeeping software and can't afford to employ anyone to do their bookkeeping for them. Advantages of going online is that your data is available wherever you are as long as you have internet access. This is ideal if you use a laptop for running your business or move around and not always in the same geographical location.
Most online bookkeeping packages come with support and various features such as built-in reports and the ability to submit VAT Returns and the like from within the software. Most are reasonably priced and don't lock you into long contracts. Kashflow for instance has a fixed monthly fee and you can benefit from a free 60-day trial (no credit card details required). It also has a wide selection of reports to print or download.
Now I must declare a personal interest here, in that I am currently using Kashflow to manage my bookkeeping. I settled on Kashflow after trying various ways of managing the transactions in my business. The problem I had (and am still grappling with to some extent) was that I sell on eBay, Amazon, my own website and to the odd personal customer. The sales on eBay and my own site go through PayPal, and I then manually transfer money from PayPal to my business account. It gets complicated because PayPal and eBay both deduct fees. Also, if I purchase goods I usually pay from my PayPal account which, if there are insufficient funds in my PayPal account, they will also transfer money from my bank account. This makes it difficult to keep track of what money comes from where. As I import goods from abroad and also sell around the E.U. and elsewhere, I have to take account of import duty, VAT and currency conversions.
It was a nightmare trying to do this manually in a spreadsheet, even one put together by my accountant. Even in Kashflow it hasn't been easy but I am on a learning curve and not being an accountant I still find the principles of double-entry bookkeeping hard to get my head around. Kashflow does try it best to make this easier than it would otherwise be and at the moment I feel that over time I will get the hang of things. Support is free and there is a very active forum so there is plenty of help available. The fact that you can pay a bit extra and have Kashflow automatically import your PayPal transactions is what convinced me to go with it. You can also import your bank transactions in .csv format for free.
All in all, you have nothing to lose by taking advantage of the free 60-day trial and there is no need to hand over your credit card or bank details. Whether you stick with it after this period is up to you but you have nothing to lose by giving it a go.
