From shopping to buying a property, most modern day tasks have moved online and there are plenty of benefits to managing your business finances online using cloud accounting.
Cloud accounting helps sole traders and company directors securely hold and manage documents such as invoices and receipts online that can be accessed from any device at any time.
Online software can automatically compile important reports such as balance sheets and profit and loss accounts so you can manage your cashflow more easily, while all the information is immediately available to your accountant. This means less time with your accountant and more time to run your business.
Here’s why it’s time to ditch the shoebox and piles of paper and look to the cloud.
Access anywhere and anytime
Cloud accounting stores everything in the same place so there is no more turning the house upside down or raiding your emails for long-forgotten receipts. Documents such as bills and invoices are automatically referenced and indexed and can be accessed from anywhere, helping you manage your cashflow on the move and make faster business decisions. This also means less paperwork so you will be doing your bit for the environment.
Safety and security
Document storage has come a long way from lever-arch files or shoe boxes. This always runs the risk of your old invoices and receipts getting lost if there was a fire, flood or burglary. Desktop accountancy programmes go some way towards addressing this but even then there can be limits on space and risk of a computer virus or crashes.
Cloud accounting ensures your files and ultimately your business is protected. Documents are saved online automatically and everything is stored and backed up on secure servers which can only be accessed with your own login details and password.
You don’t just have to be sitting on a computer to be doing your bookkeeping. Most cloud accounting packages provide apps or websites that can be accessed anywhere you have internet connection on tablets or mobile. So you could photograph a receipt for a business lunch on your phone as soon as you get the bill and immediately upload it to the cloud.
Your accountant will also be able to see your information at the same time online so queries can be addressed and answered faster and more effectively. They will also be able to monitor your income and expenditure to provide forecasts and guidance.
No more spreadsheets
There is more to life than spreadsheets and constantly keeping track of numbers. You don’t need to be an Excel whiz to understand cloud accounting. Balance sheets and profit and loss accounts are automatically updated throughout the financial year based on your income and expenses. You just need to enter the right information you are charging and paying for, the recipient and reasons and categorise them in the right place and rest is automated in the cloud, saving you time and stress.
Hopefully you never have to go through an HRMC inspection, but if the taxman does come calling your files will all be available in the cloud providing an audit trail of each transaction that the taxman can follow and you should be easily bale to find the information they are looking for.
Get ahead of HMRC
Using cloud accounting and bookkeeping will get your business prepared for HMRC’s Making Tax Digital initiative. The taxman is planning to move every individual and small business, except those with income under £10,000, to digital tax accounts by 2020.
From April 2018 some businesses, including everyone who is self-employed and those letting out property, will need to update HMRC at least quarterly where it is their main source of income or a secondary source of income above £10,000. You will be able to monitor, register, file, pay and update information in real-time at any time of the day or night, and at any point in the year, removing the need for the dreaded annual tax return.
A government consultation closed in November 2016 and HMRC is yet to finalise the proposals but most of the information needed is likely to be collected through online software and apps so you can get prepared by already being in the cloud.