Physical spreadsheets are cumbersome when you’re an accountant. That’s why many people are moving in favour of online accounting systems.
Several accounting software packages are available to you on the market. Now, with the rollout of Making Tax Digital (MTD), there hasn’t been a better time to consider switching to a digital way of working.
If you’re unaware of the benefits of cloud accounting software, this post will explain why you should consider incorporating it into your business..
What is cloud accounting software?
Cloud accounting software programs digitise your accounting work and store the data online. Platforms such as Xero, QuickBooks and Sage offer software and apps that allow you to carry out all your accounting processes from your mobile phone or laptop.
The software also updates financial information automatically and allows you to create financial statements accurately and quickly.
Advantages of cloud accounting
Having your financial data stored on the cloud allows you to keep it safe behind firewalls, encryption and passwords rather than a locked office door. You won’t need to worry about misplacing files or, worse, having your office suffer from flood or fire damage.
When you’re on the move, your cloud accounting software goes with you. Instead of running back to the office to pick up a client’s files or books, you’ll be able to log in to a portable device and have your essentials to hand.
You’ll have access to your accounts and provide access to your accountant, meaning that both of you can keep track of your finances at any time of the day.
With real-time reporting, you’ll receive quick, accurate and up-to-date information on your business’ performance. Because it will all feed directly to your app, you’ll know how things are going second by second, giving you insight into trends that impact your business.
Accounting software will automate many of your processes, reducing the amount of manual work to carry out. Programs like Xero will automatically import bank and credit card transactions, produce invoices and schedule reports.
Cloud programs will also calculate taxes and discounts and flag discrepancies in invoices and payouts where applicable.
As your software will have automation, you’ll minimise the risk of making small mistakes when doing your accounting manually. Cloud software can match received invoices to payments and automatically reconcile everything, flagging any errors that may occur.
Grows with your business
As cloud accounting can be customised, it can grow at the same rate as your business. If you offer more services as your business develops, your cloud systems can be adapted and modelled to suit through integrations and add-ons.
With Sage or QuickBooks, your payroll systems will be automated. Once your employees are added to the software, cloud accounting programs will automatically deduct taxes and National Insurance contributions (NICs) from their wages and send out payslips to your team, locked behind a set password.
Instead of spending money on a dedicated payroll employee or spending money on servers which will need to be updated every few years, cloud accounting will only cost a monthly or annual subscription fee. This also saves you time and energy used for training employees to carry out the functions Xero already does.
Making Tax Digital
Most cloud software is now MTD compatible. This means the chosen program will already be linked with HMRC, allowing you to store, prepare and file your statutory accounts. MTD for VAT is already the norm for all VAT-registered businesses, and as of 2024, self-assessment tax returns will also be legally required to be submitted online.
By 2026 at the earliest, corporation tax returns will also be moving to MTD, so getting ahead sooner rather than later is the better option.
Get in touch
It’s always good to weigh up your options, and with cloud accounting software, there are a few to choose from.
Get in touch to find out how cloud accounting could help your business.