We are often asked by new clients what is cloud accounting, and is it a wise move? The answer is always the same, whether you’ve been running a well-established business for a number years or are just starting out, it’s a definite yes!
One the most significant advantages is convenience. All you need is access to wi-fi and you’re able to run your business from anywhere. Most accounting software has an APP that you can download onto your phone or other mobile device. This means you can monitor your bank accounts, raise invoices and keep on top of all your business admin without having to be at your desk.
Many cloud accounting solutions can be accessed by several users at one time. Your books and records are updated in real-time which gives a much better picture of the health of the business.
You can also grant access to your professional adviser who can help ensure your data is accurate or even take on the bookkeeping for you. Access to this information means complying with requirements such as VAT and Payroll is considerably more efficient for you and your accountant.
Flexibility & accuracy
The flexibility of cloud accounting software will also allow you to move to a more appropriate package as your business grows. Moving away from spreadsheets is advisable as it also reduces the risk of human error.
Learning a new system
Nevertheless, you may still have reservations. It can be daunting to move away from well-loved desktop software or excel spreadsheets that you’ve been using for years. However most accounting software packages provide a plethora of support such as online training, webinars, YouTube videos and help articles. Your accountant may also be able to offer bespoke training.
Transferring your records
Perhaps the thought of transferring your accounting records to a new system may be enough to turn you away. Again this is easily overcome with the help of your professional adviser. They will be able to recommend the best time to move (whether at the end of a VAT quarter or financial year for example). They will also be able to set up the account (should you need it).
If cost is an issue, start with the most basic package on offer and upgrade as the business grows. QuickBooks Online (our favourite) offers a Self-employed package perfect for a sole-trader at around £8 per month. Also available is the “Simplestart” plan that’s around £12 per month. There are also several free packages such as QuickFile, FreeAgent and Wave Accounting on the market that may be fit for purpose. Either way, your accountant should be able to help you make a decision on what works best for you.
Making Tax Digital
If you still remain unconvinced then look no further than Making Tax Digital (MTD). Since 2019, the vast majority of VAT-registered businesses with a taxable turnover above the VAT threshold (£85,000) have been required to maintain digital VAT records and send returns using MTD-compatible software. From April 2022 these requirements will apply to all VAT-registered businesses. From April 2023 MTD for Income Tax Self Assessment (ITSA) will apply for unincorporated businesses and landlords with total business or property income above £10,000 per year. You will eventually have to succumb to the digital universe. It makes sense to start now and get to grips with a new way of working as soon as possible.
Get in touch
Here at North Star Accounting we can advise you on any of the above areas. Get in touch