The Cloud – What’s the Silver Lining?
The American President, Benjamin Franklin, once said “in this world nothing can be said to be certain, except death and taxes”, a rather gloomy outlook on life but, alas, very true. We can’t avoid either the grim reaper or the tax man, especially the latter come the 31st January. As you may (or may not !) be aware, if you run your own business this is the deadline for the submission of annual tax returns. However this date will soon lose its importance, as starting from 2018, HMRC is planning to “Make Tax Digital”.
What this means to all small businesses in the UK is that HMRC will be expecting them to keep digital records and send information about their accounts to HMRC on a quarterly basis.
As a small business owner you might think to yourself “That’s alright I can create a spreadsheet and send the data from this”. Unfortunately HMRC have stated that they will only be accepting the returns in a set format. Therefore to comply with the new rules you probably will need to invest in some accounting software to prepare for these changes.
In the last few years there has been a technological push for all data to be stored on the “Cloud” rather than having it sitting on your own computer. Accounting software is no different and companies such as Xero or QuickBooks have entered the arena by providing their own “cloud based” accounting software.
You will hear various names used by different people i.e. “cloud based accounting”, “online accounting”, “web-based accounting”, they all mean the same thing – accounting software that is used over the internet, where your accounts information is not stored locally on your machine but stored on the software providers computers based elsewhere in the world.
So what are the advantages of having cloud based accounting software?
Ease of access – All that is required is internet connectivity, a computer, tablet or mobile phone and you can have access to your online accounts, anytime, anyplace and anywhere – just like the Martini advert.
Planning – You or your accountant can work on them from any location. This can be of benefit for good tax planning and resolving any problems that may arise.
Price – Software providers such as Xero or QuickBooks charge for their software on a monthly subscription basis. Any updates are included in the monthly costs, which will allow you to budget each month.
Real time information – You will have access to your records and information instantly. Most cloud based accounting software provides a dashboard of information about the current state of your business, allowing you to make business decisions wherever you are.
No more backups – As your online accounts are kept on the cloud, all the information is backed up by the software provider. There is no longer a need for you to keep backing up the data on your computer.
Disadvantages of cloud based accounting software?
Ongoing subscription costs – You might invest in your accountancy software as a one off exercise and not need to pay to update the software for a few years; with cloud based accounting there is the monthly fee to pay.
If you decide that cloud accounting is not for your business you will have to download the information from your software provider, or keep paying their subscription to store the information for you.
To conclude, you do need to consider looking, and investing, in a cloud based accountancy system for the major changes ahead of us with Making Tax Digital.
If you wish to discuss the above or any other accounting matter please contact us at Lewis Brownlee where we can give you unbiased advice about various cloud accounting solutions and help find the right one to suit you… and your business.