Traditional accounting software ties business owners to a single office or desk. It takes up resources and reduces the fun of actually being in business.
But cloud accounting software lets you work from anywhere at any time. You can use a laptop, tablet or smartphone to access accounts data securely – and all the IT support is handled remotely.
A great example of the cloud is online banking, which uses the cloud for secure data storage.
(Cloud is just a fancy word for Internet-based.)
You can access online banking from anywhere, at any time. You can do the same thing with cloud accounting software. You no longer have to rely on a single hard drive for your financial data. Instead, you can access that data online from wherever you want, at any time – all you need is an internet connection.
“Perhaps the key benefit of the cloud is its ability to level the playing field. By removing much of the initial up-front costs, the cloud allows small and medium-sized businesses to compete with their larger rivals and in some instances to surpass them”
says Ian Stone, managing director UK and Ireland at Anaplan, a cloud-based business planning platform.
Imagine if your accounting system talked to your client management system, which talked to your inventory system, which talked to your distribution or point-of-sale system. Imagine if all the technology was hosted on the Internet and it all synced up every day, or even every minute if you wanted.
What you end up with would be a secure, easy-to-use system with rich, accurate data, less manual input and thorough reports to help you run your business in real time.
Moving from the desktop to the cloud can be scary. One of their main concerns will be the security of your financial data.
This is a natural concern, but the cloud is one of the most secure ways to store information. That’s because no data exists locally – it’s all online, protected by powerful encryption, in a similar way to your internet banking.
This is a much safer method of storage than keeping data on a local hard drive. Think about the following scenarios:
With cloud accounting software, if you were to lose a laptop your accounting information would still be completely secure. The loss of the laptop would be inconvenient, nothing more. But losing a laptop containing traditional accounting software and data could be disastrous.
In the event of a natural disaster or an office fire, you won't lose any work time if you use cloud accounting software. Your data will be safely stored online, so you can access your accounting information through the internet. But with traditional accounting software, your data may be inaccessible for days, weeks or even forever.
Computers are fragile things. Hard drives can stop working, operating systems can crash, software can have bugs, and users can make mistakes. It's vitally important to have backups, so you can return to a previous 'saved point' if necessary. In the cloud, this is all done for you – you don't have to lift a finger. But with traditional accounting software it's you – or your IT team – that has to remember to make regular backups and store them securely
Her Majesty’s Revenue & Customs (HMRC) has announced their plan to make tax digital by 2019. Under the new scheme, people will have online tax accounts that track their professional and business transactions automatically. These accounts will be submitted quarterly to HMRC to estimate the taxes due.
The online system is intended to be more transparent while removing some of the inaccuracies and inefficiencies that hinder paper tax filings.
This is not the same as lodging a return online. Most UK taxpayers have already done that for years. Making tax digital has three important distinctions:
Bank transactions and other financial information will flow automatically into people’s digital tax account, whether or not they declare that income or those expenses.
Submissions will need to be made at least once per quarter.
Submissions will need to be filed using some form of software (you’ll need to use an app that is integrated to your digital tax account).
Learn more by reading Making tax digital.
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