What do you think of when you hear the word ‘cloud’? Had I asked this question ten years ago, you’d more than likely have connotations of a fluffy, white mass located in the sky rather than associating this term with the accountancy world. These days, however, the word cloud has a much broader meaning.
In more recent years, you may well have seen television adverts promoting the latest offerings in digitalised accounting software, many of which promise to cut the time spent on administrative tasks so that you can concentrate on other aspects of running your business. These products all have the same thing in common; they are all built on the premise of cloud accounting.
Cloud accounting is the process of inputting and storing financial data online in a digital format. Cloud based accounting enables users to securely access the data through the internet anytime and anywhere. But what does this mean for your business and how can it benefit you?
Gone are the days of moth-eaten paperwork being stored in large boxes in the attic or taking up precious office space. Instead of an arduous annual trip to the accountant with heavy boxes squeezed into the boot of your car and your accountant sifting through masses of paperwork to locate one important document, cloud accounting allows you to upload digital copies of your invoices and receipts into your accounting software, saving the need to keep paper copies. Cloud accounting is therefore good for the environment!
I am sure many of you are familiar with the term Making Tax Digital. Currently this entails submitting VAT returns electronically to HMRC using compatible digital accounting software. However, HMRC’s ambition is to become one of the most digitally advanced tax administrations in the world with plans to extend the concept to regular, digital reporting in respect of income tax and corporation tax. For businesses not currently caught by the Making Tax Digital regime for VAT, this will bring with it a similar requirement to keep digital records and report to HMRC via digital software – ‘pass me that cloud accounting software’ I hear you say!
There are many types of accounting software and add-ons which can be tailored to your specific business needs. Having a chat with your accountant now will ensure that your business is well prepared for all digital changes that HMRC have in the pipeline and will save any last-minute rush to meet important reporting deadlines. The software also uses the same security protocols as online banking so your data stays safe in the Cloud.
Samantha Sanders BSC (Hons) ACCA is a Manager with A C Mole. Samantha can be contacted on 01823 624450 or by email at SSanders@acmole.co.uk