Technology has spoilt us. Tap your contactless card or pay with your phone at the cash desk, and the payment is made – and recorded forever on your bank statement. Making transactions has never been this easy, so surely there must be a more efficient way of tracking expenses than via the dreaded shoebox accounting?

HMRC predicts that by 2020 most small businesses in the UK will use cloud apps and software for record keeping and managing financial information. Online accounting software enables small businesses and sole traders to manage invoicing, bookkeeping, bank reconciliations and more, helping to future-proof your business while also saving you time and money. Accounting software is also becoming more user-friendly than ever before – no longer being developed for accountants, but for business owners.

As accountants, we have a vested interest in helping clients ditch their shoeboxes and carrier bags full of receipts…but if you need more convincing, here are five reasons why it is time to adopt cloud-based accounting software.

1. Track your income and expenses anytime and anywhere

Cloud-based accounting software such as Sage Business Cloud Accounting eliminates the complexity of tracking paper receipts, allowing you to take a photo of the receipt, and upload it on the go. Transactions and the associated receipts are kept together on the cloud, which makes it easy to retrieve, review, and share this information at any time. Multi-user access makes it easy to collaborate online with your team, and easily share information with your accountants and financial advisors.

Cloud software also gives you the flexibility to run your business remotely – from home, or on the go. You can be confident that you have an up-to-date picture of your business performance, no matter where you are.

2. Spend less time on admin

Managing your business expenses can seem a daunting task – taking up your time that could be otherwise spent on the running and growth of your business. But it doesn’t have to be – cloud based accounting software enables you to cut down on time-consuming manual data entry and removes the potential for human error and inconsistency. This means you can reduce office admin time and focus on the success of your business.

In addition to the bookkeeping, aspects of tax compliance can now be supported or fully automated as the software adds additional features that allow you to manage your business’s taxes. By accessing your business’s sales and purchase information, the software will automatically work out how much VAT you need to pay, and even submit your return to HMRC. Automating manual tax calculation can save you time and ensure your submit your VAT returns on time.

3. Increased security

We understand you may be concerned about storing sensitive business information in the cloud. This is a reasonable concern in today’s connected world and with frequent news of data theft. Be assured that these cloud based products represent as safe and secure a platform for your data as is currently possible. Bank-level data security keeps your account safe, and constant, instantaneous backup and data encryption protect and secure your private information.

Data is encrypted using industry-standard data encryption, multiple layers of firewalls are in place, all access to the data centres and servers is controlled and monitored 24/7, and regular security audits are performed. Most software also offers the option of two-step authentication which adds an extra layer of security to help protect your account. For example, each time you log in, you would enter a unique time-limited code generated by an app on your smartphone.

4. Reduced costs

Cloud accounting software ensures that all your regular accounting needs can be covered with a monthly subscription plan suitable for the size of your organisation. Upfront business costs are reduced – version upgrades, maintenance, system administration costs and server failures are no longer issues. Instead, they are managed by the cloud service provider.

The functionality and capabilities of current cloud based software were previously only available in desktop products at a significant cost – prohibitively so for small traders. The same functionality can now be obtained at a low monthly cost (£22 plus VAT for the fully featured Sage Business Cloud Accounting).

To get you started, we are offering free licenses for Sage Accounting Start (normally £10 + VAT/ month), sign up for one here.

5. Ensure compliance and be prepared for MTD

MTD stands for Making Tax Digital and is a government plan to digitise nearly all of the submissions, exchanges and communication between taxpayers and HMRC. This will make it easier for individuals and businesses to stay on top of their tax, and provide the government with real-time data on potential tax collection. Most small or medium-sized businesses will not be required to keep digital records or update HMRC quarterly until 2020.

Recommended: Making Tax Digital: FAQ

Since we are at the beginning of 2018, this gives small traders and businesses less than 2 years to prepare for the change. At some point in the next two years, you will need to start keeping digital records and you will need to find a way of providing these records to HMRC electronically. Adopting cloud based accounting software ensures you are prepared for the change, as storing your records in a digital format will enable seamless communication between your small business and the tax collection agency – HMRC.

Accounting software products also ensure you are compliant with UK accounting legislation – for example, any changes to VAT legislation and submission are reflected in the software updates.

Sage Business Cloud Accounting

We are currently offering free licenses for Sage Business Cloud Accounting Start – perfect for start-up businesses, sole traders, property landlords, or small businesses currently using basic manual records.

The software is easy to set up and very simple to use, and when you feel in need of some help we can provide you with training, provided by our Sage Guru.

To learn more about our accountancy service and training for sole traders and small businesses in Glasgow, call 0141 334 1318 or email us at hello@bnassociates.co.uk

References:

[1] Tax Accounting Software | Sage UK. (2018). Available at: https://www.sage.com/en-gb/accounting-software/tax

[2] Four Reasons Why SME Owners Should Switch to Cloud Accounting | Accountancy Age. (2017). Available at: https://www.accountancyage.com/2017/03/24/four-reasons-why-sme-owners-should-switch-to-cloud-accounting/