February 15, 2019 | No Comments
What is cloud accounting?
Cloud accounting uses software that is hosted on remote servers rather than on a company’s own servers. Data is sent to and stored in “the cloud,” where it is processed and returned to the user – all application functions are performed off-site and not on the user’s desktop.
Why should I invest in cloud accounting software?
1. Work from anywhere
Cloud accounting software allows you to work from anywhere and on any device with an internet connection. Whether that be a computer, phone or tablet, you can easily pick up from one device, where you left off from another.
This gives you better control and oversight of your business’ operations and you can submit expenses and update records wherever you are.
For medium and larger-sized businesses, it’s not uncommon to have multiple staff needing access to accounting records from multiple locations to edit and update them. With cloud accounting software, this can be easily achieved. You can create multiple accounts for each member of staff who needs access and even tailor permissions so they can only see what they need to see.
For example, you can alter permissions so that your payroll team can only access and edit payroll information whereas directors and your accountant have access to view all accounting information.
Access of key accounting records for necessary staff can help speed up processes and ensure efficiency amongst teams.
3. Go paperless and declutter
Cloud software enables users to take photos or scan in receipts and invoices and store them on the cloud. This means that you no longer have to worry about misplacing receipts or letting them clutter your desk – they are kept safe and secure online.
4. Save time with automation
Manually creating and sending invoices every time a customer makes a purchase can eat up hours every week. But, it’s critical if you want to avoid any future cash flow woes. Most cloud accounting software tools help businesses to automate and streamline their invoicing.
Cloud accounting software can also automatically calculate employee net pay, PAYE withheld and superannuation, and enable pay runs – all from within the cloud platform. You can even use it to generate HMRC compliant reports, including legislated liabilities reports, such as PAYE withholding and pension contributions, and HMRC payment summaries.
Most cloud accountancy providers offer incredibly high levels of sophisticated data security which is usually either compliant with, or exceeds, the Payment Card Industry Data Security Standard.
This stringent measure ensures that your data is stored completely securely and you also don’t have to worry about losing any of your data as this is all securely backed up in the cloud – rather than sitting on a potentially vulnerable stand-alone machine.
6. Real-time overview
One of the biggest disadvantages of traditional desktop-based accounting software is that in order to share your financial information with your accountant, you would have to either print off the documents, or save and send via email.
A cloud accounting solution for your business would provide you with a real-time overview of your accounts.
By granting your accountant access to your account, you will also save a lot of time from not having to download and send information as they will be able to view it by simply logging in online.
7. Costs reduced
In the past, businesses typically had to pay a large sum for a specially-made piece of accounting software which would have to be installed on numerous computers.
Cloud accounting providers bill monthly – often making it cheaper and better for your cash flow.
In addition, software updates and upgrades are included in the price and you can add extra features and capabilities as your business grows through apps and plugins including ones for payroll and personal expenses.
8. Making Tax Digital
As you have probably heard, Making Tax Digital is a new government legislation where VAT-registered businesses over the turnover threshold of £85,000 have to file their VAT returns online through functional compatible software.
MTD for VAT comes into effect from April 2019, and will eventually become mandatory for all business taxes, including corporation tax and the self employed.
If your business fits the criteria and will be affected by MTD for VAT, it may be the time for you to consider moving to the cloud, as most cloud accounting packages are MTD compliant and this makes it easier for you to share accounting information with HMRC and be compliant.