For both small businesses and accountants, the accounting industry is changing. Cloud software has had a huge impact on the industry in recent years, and will continue to do so for the foreseeable future; especially with the introduction of Making Tax Digital in 2019.
Benefits for small businesses
Cloud software isn’t just changing the industry for accountants, it’s also changing it for the small business owner too. If you’re stuck on spreadsheets, it’s time to change. Cloud accounting has multiple benefits, and these are just a few.
Although people are often wary of anything that will be housing their private information, there’s no reason to doubt that the cloud is incapable of keeping information safe.
A 2014 report published by the Chartered Institute of Management Accountants (CIMA) stated the most popular reason for businesses not adopting cloud technology was because of fears over data security and protection, with 66% voting it the reason they were not on the cloud.
However, in the same report CIMA also commented that a technology expert listed ‘increased security’ as the main benefit of cloud technology.
Cloud software allows real time updates and multiple users being able to edit information at the same time. That means you and your accountant can manage your accounts simultaneously, allowing them to talk you through processes.
YouGov Omnibus research confirmed 30% of UK employees feel their productivity is increased when they work remotely.
54% of UK office workers are able to work remotely; a number that’s on the rise. It’s a good way for businesses to put trust in their employees, while also reducing overheads.
That means that business owners need to be able to access their accounting information from any device, anywhere. The cloud offers this capability, meaning businesses don’t have to be tied to one server or location to access data.
The report by CIMA also stated that the second most popular reason for businesses adopting cloud technology was cost efficiency.
Less physical hardware means you don’t need a space to store a server, and you don’t have to worry about the inevitable costly technical errors that come with housing your own server.
Unless you’re able to keep the room a certain temperature, and have IT experts on hand to smooth out any problems, it’s going to be a lot more cost efficient to store your data on the cloud.
The changing role of the accountant
The huge capabilities of the cloud are not only changing how small businesses deal with their data; they’re also changing the role of accountants and their relationship with small business owners.
While accountants are certainly not becoming obsolete, as some have claimed, they will be taking a more advisory role.
Repetitive tasks like manual data entry will soon be completed in a more efficient manner, leaving accountants to give small business owners advice on saving tax and what kind of business structure would best suit them.
Accountants will be able to collaborate with their clients and work with them in real time. This means they can aid them in decision-making and give business owners insights into their business accounts more often.
Making Tax Digital
It’s now ‘when’ will you switch the cloud accounting, rather than ‘if’.
Making Tax Digital (MTD) will be in full force by 2020, so your small business needs to embrace cloud accounting sooner rather than later.
The MTD initiative announced by HMRC in the March 2015 budget will eliminate the need for businesses to submit an annual Self Assessment Return. Instead businesses will be required to update tax information online on a quarterly basis.
We’ve gone into more detail on how Pandle can help you when MTD becomes compulsory here.
Is your business with the cloud? Or are you still updating the books on a spreadsheet? Leave a comment in the section below with your thoughts!
Article has been edited in line with the Making Tax Digital deadline extension published on 5th September.