6 Secrets of Switching to Cloud Accounting That Every Charity Trustee Must Know
Bookkeeping is essential to help you keep track of your Charity’s financial transactions.
As a trustee, you’re obliged to make sure that you have adequate records, so that you can accurately report to the Charity Commission.
Charity Trustees should also aim to have a system that can give them an up-to-date picture of their financial position.
This will help you manage the finances of the Charity and in the process safeguard its assets.
There are 6 key factors about switching to Cloud Accounting that every Charity Trustee should know.
1 – Keep Everything you Need All in One Place
Your bookkeeping system needs to be set up on the principle that you have all the records you need.
Your system needs to provide comprehensive records of both income and expenditure.
For example copies of orders, invoices, delivery notes, and so on.
You also need to keep bank records and be able to show that everything reconciles and matches up.
Cloud accounting software such as Xero makes all this possible – all in one place.
The most simple Charities may use a paper-based accounting system for their books and records.
But, even the very smallest Charities are now choosing to switch to Cloud Accounting Software.
2 – Save Time and Stress through Automation
Cloud Accounting Software will allow you to create a far more useful bookkeeping system. You will be able to generate insightful reports.
You will also simplify repetitive processes and minimise mistakes through human error.
Cloud Accounting automates your bookkeeping which means that you can see your up-to-date cash position in an instant.
You will know exactly how much you owe your suppliers and who you may need to chase for any money owed to you.
3 – Get Insightful Reports That Can Help You Manage Your Charity Well
More sophisticated add-on modules can even help a Charity with cashflow management and budgeting and a whole range of other areas.
You can set up your Cloud Accounting system with clever tracking codes for Restricted Funds and Unrestricted Funds.
You can then use these to produce Income and Expenditure Accounts for each Fund.
You can keep track of spending and make sure that you only use funds for their intended purpose.
4 – Keep Proper Payroll Records
If your Charity has employees then you will need to make sure you keep proper payroll records.
You will need to have a payroll system that can work out PAYE, and National Insurance. It will also need to take into account other deductions such as Workplace Pensions.
With Cloud Accounting solutions such as Xero, the Payroll package can be inbuilt. So the processing and recording of payroll are seamless and much more efficient.
5 – Produce VAT Returns in line With Making Tax Digital
If your Charity is registered for VAT, your sales invoices can be raised and emailed to your customers by your Cloud Accounting Software.
There are even some incredibly efficient methods of capturing purchase invoices with a snapshot on your mobile phone.
The software extracts all the relevant data to Xero such as the supplier, the payable amount, and the VAT.
This reduces time-consuming data entry and the chance of human error that goes with it.
What’s more the software can then pull all this information together into a VAT return.
Your accountant can review your VAT return and help you file it. This makes it easier to keep you in line with the Making Tax Digital (MTD) requirements.
6 – Help with your Statutory Accounts and Tax
It is more efficient to produce Statutory Accounts when the records are on a Cloud Accounting system.
No more trawling through paper-based books and records or clunky spreadsheets.
Your accountant will be able to collaborate with you in real-time by logging into the system and helping with any queries.
This will help you keep up to date throughout your Charity’s financial year.
No last-minute panic to submit proper accounts to the Charity Commission on time.
Conclusion
By switching to Cloud Accounting software from a traditional system any Charity can save time and reduce stress.
Compliance with the reporting and tax requirements will be easier.
And the improved reports will help you make your Charity an even better run one.
P.S. Discover how we can help you transition to Cloud Accounting Quickly and Easily.
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