Advice on choosing a farm accounts package

Farm businesses should see HMRC’s Making Tax Digital rules as an opportunity to simplify record-keeping and improve financial performance, according to accountant Andrew Robinson.

Since April 2019, farm businesses with a turnover of more than £85,000 have had to comply with the rules. But from April 2022, all business will have to comply. 

This means farmers will have to record accounts on an Excel spreadsheet and convert it into digital format or use an accounts package.

See also: Changes to submitting VAT: What you need to know

Mr Robinson, head of agriculture at Armstrong Watson Accountants in Hexham, says: “VAT-registered businesses will have no choice but to submit digital VAT returns.

“You might as well invest in an accounts package that not only ensures compliance but benefits your business, especially given the challenges we have ahead with BPS reducing.”

Below, Mr Robinson gives advice on what to look for when choosing a package and how to get the most from it.

What are the benefits of using an accounting package?

• Provides real-time information on how your business is performing financially
• Allows you to monitor cashflow and budgets
• Allows you to tax-plan more efficiently by assessing how the year is looking more quickly
• More robust and less room for errors.

What should you look for in a package?

Look for a package that is specifically for farmers. There are various programmes available such as Farmplan, Landmark and Summit.

Xero is an accounts package with bolt-on packages to make it applicable to farming.

Xero can’t do cost of production and budgeting, but Figured can be incorporated to do this. Information is shared between the two packages to save you having to input data twice.

What should farmers do to get the most out of their accounts package?

Too many farmers still don’t keep or monitor management and budget accounts.

If you don’t do these already, start annual budgets and then, on a monthly basis, check if the actual figures meet the budget.

What questions should you ask companies when searching for software?

• Can it link to HMRC? This will save time when submitting your VAT return.
• Is it compatible with other products that you may wish to use?
• Can it link to your bank account? This will pull in bank feeds and make reconciliation easier.
• Is it cloud-based? This will save you the hassle of installing updates, and it automatically backs up data.
• What support is offered?
• Ask peers for feedback about the software they use.
• Ask for a demo so you can try it before you commit and see how user-friendly it is.

Are there any pitfalls to avoid?

Once you’ve decided which software to go for, the worst thing you can do is scrimp on the set-up and training costs. Invest in these and avoid spending thousands correcting errors at a later date.