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Why use accounting software for your retail business?

Retail is about record keeping

There are many different types of retail operations, from eCommerce and mail order to direct retail, pop-up shops, catalogues and more. As a small business owner you might use more than one type, depending on the products you're selling.

But as any retailer knows, success involves more than just exchanging goods for money. You need to understand product merchandising, advertising and marketing, stock control, customer service, market research, supplier negotiation and more.

Retail can be seasonal too, with peaks in the run-up to Christmas and the back-to-school periods. The best retailers think carefully about how – and when – their products fit into consumers' lifestyles. They use that knowledge to market their products.

And then there's the accounts. Cashflow, payroll, taxes, ledgers and so on, all have to be tracked carefully. With money coming in and going out all the time, you won’t want to let anything slip through the cracks.

All of this means that you can't run a successful retail business without keeping detailed records. And that's where good quality accounting software can help.

Make a plan before you start

It can be tempting to dive straight into a new retail business, especially if you think you've found a gap in the market. But it's sensible to plan your business first. In particular, you should:

  • Choose your company structure Different businesses have different legal structures, with pros and cons to each. Read our guide 'When you should hire an accountant', to learn which business structure might suit you.

  • Choose your business location Will you have a physical store, or an online-only store, or a placement – where you advertise your products as part of a site such as eBay or Amazon? There are many options. Bear in mind that most physical stores these days need an online presence too. Without one you'll be missing out on potential customers.

  • Think about funding Carefully calculate how much capital you will need to start your business. How will you get that money? Read our guide 'How to raise money for your business', for some of the options available to you, and use good quality accounting software to make forecasts and predictions.

  • Think about inventory management This is one of the biggest challenges in retail. Get it wrong and you'll either be left with lots of unsold stock, or run out of the products your customers want to buy. Read our guide to retail POS systems for help and advice.

These are just a few of the points you should include in your plan. Talk to a business advisor about more detailed planning, especially when it comes to tax and payroll laws in your part of the world.

How retail accounting software can help

Accounting software isn't just for accounts. Today's accounting software can be connected to lots of other apps. That gives you potentially hundreds of joined-up tools to help you manage your retail business.

When deciding which accounting software to buy, here are a few points to consider:

  • Was it designed with retail in mind? Does the software work well for retailers? Read the online forums and specifications carefully.

  • Does it have multiple access levels? It's best to have different levels of permissions for owners, managers and others with special authorisation. You won't want everyone on the shop floor having full access to your accounts.

  • Can it record transactions and manage payroll? Nearly all accounting software handles transactions, but payroll might only be available as an upgrade. Check before you buy.

  • Can it track inventory? Some do, others don't but can be seamlessly linked to add-on apps that can. Do your research, as this is a useful feature for retailers.

  • Is it cloud-based? If so, it'll give you access to your accounts from anywhere at any time, lower support costs, automatic backup and easy connection to other apps.

  • Is it scalable and extensible? Scalable means it will grow as your company does, letting you add new users when you need to. Extensible means you can add new features to the software just buy purchasing new add-on business apps.

Whichever retail accounting software you choose, be sure to keep all your important information safely archived. This includes sales records, loan statements, bank information and tax data. You'll need it all for your tax returns, and also if your business is ever audited.

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