HMRC have recently been pushing their strategy for Making Tax Digital across the UK, resulting in increased compliance burdens for all business owners. In a majority of cases, this is forcing businesses into complying and adopting a cloud accounting solution, but this pressure can impact your decision and could make you select the easiest option, and not necessarily the best option for your business.
The benefits of utilising accounting software for small businesses
There are numerous benefits of accounting software for small businesses, and although compliance is one of them, it should certainly not be your main reason for adopting cloud technology. Accounting software is your opportunity to modernise your business, reduce down time spent on admin tasks, and automate the mundane.
Modernising your business
There are still many businesses producing invoices for their customers manually and then sending these on email or by post. This process is time consuming and usually one of the first things to fall when a business is busy, which means you are not getting paid for the work you are busy doing!
Invoicing through cloud accounting software enables you to enter the data for your VAT return and/ or annual accounts, whilst at the same time preparing the invoice to be sent directly to your customer from the software using a pre-prepared invoice template and keeping track of invoices that have been sent or paid.
There is also the added benefit of being able to invoice anywhere, anytime on any device that is connected to the internet.
Automation and real time
Most businesses will have access to their bank online, able to view their balances, make payments or transfer money anywhere in the world. So why wouldn’t you want the same for your business? Cloud accounting means access to your data from anywhere in the world and opens up the possibility of automating through connections.
One of the biggest advantages of cloud software is connecting your online bank to your accounting software so that your bank statement is automatically imported for you, leaving you with an easy-to-use format, enabling software to auto suggest matches reducing your admin time.
All of this data produced in real time also means that you can see how your business is doing at any time, only 24 hours behind by easily running any financial reports from your laptop or mobile. No longer are you making decisions based on outdated statutory reports but working with your advisor to make proactive tax planning and strategic business decisions.
Support and development
Most cloud accounting software works in partnership with other products, which means you can connect the software you use for the day to day running of your business to your accounting software and avoid replicating data.
It also opens up the possibility of stacking your business model, by starting with the accounting basics and adding on other tools you need such as a stock and inventory control or connecting with your till system.
Being online also means working with your advisor in real time whenever you need support or training as well as having access to the latest versions without needing to pay for hefty desktop upgrades.
What a lack of accounting software can lead to
Not having software can very easily lead to the failure of a business. If not solely from having a limited view of how the business is performing and whether you are generating a profit, it can be from missing out on key compliance thresholds such as turnover for VAT registration, or meeting making tax digital requirements resulting in hefty fines and penalties.
It can also result in much more admin time and pressures in meeting deadlines, as data will need to be digitalised and submitted in the correct format. This will further result in increased costs as more work is needed to produce accounts and replicate the work you have completed.
Lovewell Blake can help you implement an accounting software solution
Of course, cloud accounting software is just one aspect of running a business, so at Lovewell Blake we offer a full range of tax services tailored for small businesses.
We offer a free no obligation meeting to discuss your needs and walk you through the process of moving to cloud accounting software and deciding what software will work best for your business. We can assist in implementing the move and providing training remotely or in person and can work to your requirements. Please speak with one of our staff for more information.