Cloud accounting – where have we come?

Cloud accounting – where have we come?

The right online accounting package can give you invaluable insight into your business, improve performance and allow you to run your business anywhere. Cloud accounting allows you to connect and collaborate online with others including your accountant, who can give you advice in real-time about your business.

George Reed, Accounts Trainee, describes what Cloud Accounting looks like and how it can be beneficial to organisations. He also highlights some key benefits to consider, including efficiency and ability to link up to real time bank information.

On boarding

The initial uptake of Cloud Accounting was not to everybody’s liking. As many were used to desktop programs such as Sage, QuickBooks desktop, Quicken and traditional cashbook paper records the thought of trying to change bookkeeping software while also managing their busy businesses was not a top priority.

However, like it or not, many business owners were forced to up take cloud accounting (or similar programs) with the on boarding of Making Tax Digital (MTD) for VAT. This meant that even those businesses who had been using cashbooks for years now had to adopt an MTD compliant software to run their books and submit their VAT returns. Up until now, VAT registered businesses with a turnover less than £85,000 did not have to submit through MTD. However, as of April 2022 this will change, and every VAT registered business will have to enrol with MTD for VAT.

It does not stop there! April 2024 will be the start of MTD ITSA (MTD for Income Tax Self-Assessment) which will apply to sole traders who will need to take on MTD software to submit quarterly Income Tax reports. This will apply to a wide scope of businesses who have not previously needed extensive bookkeeping processes.

There is no avoiding the way in which bookkeeping is going and lots of businesses are adapting to this change with one of the top cloud-based providers; Xero, QuickBooks, Sage One etc. These relatively newer software packages have been able to incorporate the new legislation as its being enforced. Thus, they have been able to develop in a seamless style compared to other traditional desktop software, which is ideal for start-up businesses and people who are after a more simplistic software package.

The benefits

This new age of software comes along with many advantages which we had not previously seen in the accounting world. One of these being the accessibility of cloud-based software. The initial on boarding with cloud accounting consists of setting up the license which can all be done through your internet browser; there is no need to download and install a program to your desktop. This means you can keep up to date with your bookkeeping on any of your devices simply by signing in and makes viewing your data easier.

For example, if you need your data reviewed by a third party there is no need to run off reports or take a backup of the data. You can simply send through a read-only user account via email which can get them connected in minutes.

Likewise, this also works in favour for our clients when they need help with their software. We can login and view their data in real-time which helps massively when helping with a query – there is nothing worse than struggling to help because you are not able to see what your client can see! This way we can look at the exact same transactions and see the updates as and when they change.

We have also found that our clients have made a lot of use of the reporting features of their new accounting systems. Beforehand, if you were recording income and expenses on paper, it would not be very quick or easy to report that data without a lot of manual work (even on excel you would be required to input various formulas) which would take away time for valuable business management time. However now you can go to the reports section and run financial reports in seconds, which give an in-depth view of the business. This might not have been something that a business owner would have done beforehand, but now because the feature is instantly accessible, they can spend more time working on the business rather than in it!

The majority of cloud accounting software benefits from live bank feed which links with your online banking account. This automatically draws down the date, amount and bank details for each transaction. Not only does this cut down on processing time but also reduces errors, as the date and figures are no longer inputted manually.

Summary

These are just a few of the benefits that come along with cloud accounting. As well as their own features, there are many Apps that can bolt onto the bookkeeping software to further assist your business. With the wide variety available, they can help manage cash flow, paperwork, time and other aspects of the business.

As I have previously explained the change to cloud accounting requires learning and patience. However, we have seen that once this stage has been surpassed the efficiency and benefits of cloud accounting makes up for lost time. Once up and running it can give a great financial view of a business where the owner had not previously seen any. We are always here to help, as this isn’t always an easy transition; nevertheless, it is going to be a necessary one.

How can Haines Watts help?

We advise clients on a broad range of audit and compliance related matters throughout Launceston and the South West.

If you would like to have a conversation about cloud accounting or have a general query, please get in touch with your usual Haines Watts contact.