Plumbers are commonly self-employed, which means that they’ll need to keep track of their finances as any other business would. Consistent bookkeeping can be tricky, though, since plumbing can be a very time-consuming occupation. To make things easier, a good idea is to use accounting software.
In this article, we’ll look at some of the benefits of accounting software and a few of the features you should look for to get the best software for plumbers. The topics we’ll cover include:
- Why do I need accounting software?
- What features should I look for in accounting software?
- How can I get accounting software easily?
Why do I need accounting software?
Make paying tax easy
The amount of taxes you pay and the system you’ll use depends on how you register your business — that is, whether it’s a sole trader or a limited company. Paying the correct amount of tax is hugely important, as the government can charge you with tax evasion for intentionally paying less tax than you should. Tax evasion charges can lead to punishments like an unlimited fine and up to seven years in prison.
On top of that, paying taxes can be very complex. One of the trickiest parts of paying tax is claiming back any business expenses. You pay money to HMRC for any profit you make, but you can reduce your tax bill by claiming purchases as business expenses. This means you’ll only pay tax on the profit you made and not on the cost of purchases necessary to run the business.
For plumbers, these expenses could be materials, tools, or (if you have a van you use for work) petrol. You’ll have quite a few expenses if your plumbing business gets a lot of work since you’ll likely need to buy new materials for every new client. This is costly, but the advantage is that you can use those purchases to reduce your tax bill.
Without accounting software, this can all get a bit confusing. Software like the Countingup app can help simplify things, as it has a range of features that help you record expenses and fill in tax forms.
One of Countingup’s best features is its automatic expense tracking. This feature will organise your expenses into similar categories to the ones you’ll get on HMRC tax forms, so filling in those forms is as simple as copying the information across.
Monitor your income
Self-employed plumbers should also take an interest in their profits and losses, as their income decides the success of their business. High-quality accounting software allows you to monitor all your transactions easily, so it provides a much better idea of how much you’re earning and spending. This also means that making an actual profit and loss statement — the document showing how much money your company has made and lost over a set period — is much easier when using accounting software.
Countingup’s software goes a step further to help you keep an eye on your incoming and outgoing cash. The Countingup app shows a real-time view of your profits and losses, updating as you receive payments and make purchases. This means you’ll be able to record your profits and losses as soon as they go onto your account.
What features should I look for in accounting software?
MTD stands for Making Tax Digital, a government initiative to make HMRC a more digital-friendly institution. This will mean some big changes for small businesses in the next few years.
One of the biggest changes is that businesses will need to file their tax forms digitally. While the changeover might sound inconvenient, the time-saving features that certain compatible accounting software tools offer to mean that MTD can make doing taxes easier for business owners in the long run.
The other notable change is that there will no longer be an annual tax return. Instead, self-employed individuals will need to send information to HMRC four times a year. This doesn’t mean doing four tax returns, though. It just means sending financial data to HMRC on a more regular basis.
The rolling out of these changes will take place over a few years. In April 2022, VAT-registered businesses with a taxable turnover of less than £85,000 will need to submit their VAT return per MTD guidelines. Then in 2024, self-employed individuals and landlords making over £10,000 from businesses or properties will need to follow MTD rules when filing their income tax self-assessment.
MTD rules mean you’ll need to use MTD-compatible software when filing tax forms to HMRC. Since Countingup is MTD compatible, it’s fine to use it for any of the tax-related tasks we’ve listed above. Eventually, all businesses will need to follow MTD rules, so it’s smart to download and use the right software before you get left behind.
You’ll be in charge of your own financial management most of the time, but occasionally you may have to hand over some responsibility to an accountant. Making sure they have all of your financial information can be complex and frustrating, but good accounting software should have a system in place to streamline this process.
Countingup, for example, has an Accountant Hub where an accountant can access their client’s data quickly and securely. Users simply send their accountant an invitation on the Countingup app, and the accountant can then find everything they need to do their job.
Where can I find the best accounting software for farmers?
If you’re looking for accounting software that provides the benefits we’ve listed above, you should look into Countingup. Over 40,000 business owners already trust Countingup to save them hours of challenging and confusing financial admin.
Countingup is the business current account with built-in accounting software that allows you to manage all your financial data in one place. With features like automatic expense categorisation, invoicing on the go, receipt capture tools, tax estimates, and cash flow insights, you can confidently keep on top of your business finances wherever you are.
You can also instantly share your bookkeeping with your accountant without worrying about duplication errors, data lags, or inaccuracies.
Start your three-month free trial today. Find out more here.