Money Matters

Make smarter, faster money decisions with simplified accounting

Understanding how accounting software works is the first step to making your business accounting easier to manage as a sole trader.

Woman working in retail at the computer

Today’s AI-powered business world gives you solutions that use technology to manage accounting tasks. But, when it comes to having the details you need to quickly make smart decisions about your business’ finances, where does tech make the biggest impact?

Here are a few practical suggestions that help you understand how accounting technology can be custom-fit to your business needs, and why simplifying your accounting is a critical step for you to confidently make the financial decisions that will grow your bottom line, including:

  • How you can make getting paid easier, reduce late payments, and stay ahead of unexpected business expenses.
  • Simple tips to incorporate tax preparation into your business accounting.
  • How to easily monitor the key indicators impacting your business’s financial health.

Keep cash flowing

The golden rule of a sole trader is: “cash flow is king” for sustaining or growing your business. That means you need to be aware of money moving in and out of your business account so there’s always enough to cover your expenses, like your rent, utilities, and supplier invoices.

Accounting software with AI and automation technology built in, keeps a digital track of your cash flow so you always know where your business stands. Even further, having real-time cash flow data on hand can help you make informed decisions about your business finances today, predict future outcomes, and prepare for any shortcomings or pitfalls.

For example, automation functionality within accounting software can support positive cash flow for your business in various ways.

You can automate invoices and other recurring payments coming in, so you’re never (or, at least rarely) left chasing them. You can also customise payment terms for your customers and clients that work best for your business, and communicate those terms automatically, so there’s no friction with you getting paid.

If you need to chase a late payment, AI and automation in financial software can even help you there with reminders and communication templates already set.

As well as an immediate effect on cash flow, there’s the future cost opportunity involved with digitally managing your supplier invoices. As you collect budget and usage data over time, you may be able to negotiate better terms with your suppliers, increasing cash flow in the future, too.

Keeping a close eye on your cash flow means you’re always ahead of any financial surprises and equipped with a contingency plan to keep things moving.

Year-round tax prep

Again, probably not something you are passionate about, but it must be done. Thankfully, AI-powered accounting software can help you streamline many of the requirements and keep you organised and on track throughout the year.

In the UK, MTD for Income Tax comes into effect in 2026, meaning that above a certain threshold of income, solo traders will, by law, have to change the way they do accounting from a single Self Assessment, to quarterly reporting and a final end-of-year Assessment, digitally, through accounting software.

So, when considering accounting software, it’s important to choose one that makes this easy, keeps you compliant, and your business can grow with.

Saving receipts

One of the most painful parts of tax prep is digging out old receipts from business expenses made over the year. With a digital accounting system in place, you can easily capture and record purchasing details and categorise each one (i.e., equipment, supplies, travel costs) if you want to claim allowable expenses when you file taxes.

If you’re expensing business travel by car, you’ll also need to keep an accurate mileage log that details the dates of your travel, start and end points, and total miles travelled per trip. Accounting software can help you tally all of this well before tax time, and help you keep notes about your travels for additional proof and documentation.

Keeping an accurate receipt log will make it easier to transfer your information when it’s time to file your Self Assessment tax return and pay taxes.

Safely store important records

As a sole trader, you’re also on the hook for tracking important records as legally required. Things like VAT records if you make above the VAT threshold for the year, PAYE records if you have employees, and the details of your personal, take-home income must all be documented and readily accessible to make tax time a breeze.

Accounting software can help you manage this as well. You can easily make updates as you need, and you can quickly share these documents when it’s tax time or if you decide to get tax help from a pro.

Keep close tabs on key financial health indicators

AI-powered accounting software is most impactful when you use the reporting and statements within to understand your business’s financial foundation. These insights are invaluable when you see how easy it is to spot trends, patterns, and opportunities in your business’s financial performance.

Don’t let the thought of reports and statements scare you—you don’t have to be an accountant to understand the building blocks of your business accounting. It’s simple to start generating commonly used reports and statements once you connect your business bank account to your accounting software when you choose the right software.

For example, statements about your business’s cash flow can autopopulate once the software pulls in your transactional history. Common reports and statements you’ll need are:

Balance sheet: an overview of your business’s net worth. This is a list of your assets alongside your liabilities, or what your business owes.

Profit and loss account or income sheet: this shows whether your business has made or lost money over any period of time.

Beyond the basics, like autopopulating financial data, many accounting software solutions offer customisable reporting and statements to give you financial views that are specific to your business’s needs. These insights can give you a new level of understanding about your business’s financial health, and the actions you need to take to remain profitable.

Final thoughts

Keeping up with accounting demands can feel like a lot. Accounting technology that includes AI and automation can fill in the knowledge gaps to help you create a plan for your business goals. Simply connecting your business bank account can automate many of your basic bookkeeping and accounting needs so you can spend more time building your passion and planning your next big move.

Accounting tech like AI and automation can condense your business’s financial health into a picture that is easier to digest than a bunch of spreadsheets. It helps you remain tapped into your critical business information, and you’ll be set up to easily share that information with an accountant if you decide to get professional guidance.

Are you inspired to simplify your business finances yet? Download these 10 tips to simplify your accounting as a sole trader.