More and more business are starting to use cloud accounting software for their businesses. But what is it and should you be using it too?
Cloud accounting is the same concept as accessing your bank account online. You don’t need to install the software on your desktop, keep it up to date or back up your data. You can access your data from anywhere that has an internet connection and collaborate easily with your accountant who can access your real time data as well, if you let them!
Cloud accounting is generally subscription based – so you will pay anywhere between £5 and £30 per month depending on which package and product you go for. Most VAT registered small businesses will pay between £10 and £20 per month.
Popular options are Kashflow (my favourite), Quickbooks, Freeagent, Xero and Sage – and most will offer a 14 day trial so you can try before you buy.
The main advantage is that all your information is in one place. You can add logo’s etc so you can raise your invoice directly from the software, it will then show you who owes you what – and how old the debt is. With “automated bank feeds” you can link your bank account to the software so you can download your bank statement directly into the package. It will then match up receipts with outstanding invoices and payments with suppliers for you. Other amounts paid from the bank can be allocated to a category such as “stationery” or “materials purchased” quickly and easily.
You can even get “add-ons” now such as “Receiptbank” (payable extra) where you literally take a photo of your receipt and an app whizzes it off to your accounts package for you. No more losing receipts or sitting down once a month to put them all into a spreadsheet.
Another advantage is you can see how your business is doing during the year. I have some clients who hand their books over once a year and have no idea what their sales figure has been for the year, or if they have made a profit or loss. Cloud accounting produces real time key data for you – in reports or graphs for you “creatives” out there!
So is it for you? If you have sufficient transactions to make your bookkeeping a chore, or if you hand your accountant a shoebox at the end of the year full of receipts that have probably been through the wash once or twice – then definitely! The monthly cost is minimal given the time savings involved.
For very small businesses, then you may find your spreadsheet is adequate for now but with HMRC pushing for everyone to have “digital tax records” by 2020 or sooner, it may be that cloud accounting will soon be the way forward for everyone.