In the next two to three years, we will see the extension of HMRC’s Making Tax Digital initiative to include all VAT registered businesses and any business with significant earnings subject to income tax. This will include most self-employed business owners and property letting businesses. Those affected will have to digitise record keeping so their data can be uploaded to HMRC’s servers each quarter.

Add to this the need for all businesses to be keenly aware of their current financial position – to counter COVID disruption and other challenges – and it is not difficult to see that we all need to use and benefit from computerised accounting records.

The age of manual record keeping is passing

We are witnessing the end of keeping business or other tax information in a hand-written format. The process is slow to manage and prone to error.

Instead, we need to embrace digital record keeping.

Hand-written records, spreadsheets or Cloud-based accounts software

You may have taken the first tentative steps towards digitising your record keeping by recording transactions on a spreadsheet. Spreadsheets are rather like manual records – you still need to make individual entries – but totals are automatically updated using formulas. They do offer advantages, but unfortunately, these advantages are limited unless you have significant Excel coding skills.

We can’t over-emphasise the benefits of taking that extra step and using cloud-based accounting software to record and use in your business. 

The benefits of cloud accounting software

1. You can link your bank accounts to your software – gone are days when it was necessary to reconcile entries using a pencil and paper statements, most accounting software handles this for you.
2. You can create and send invoices to customers directly from your PC/iPad or laptop. And, importantly, you can set up processes to manage credit control. For example, automating monthly statements and chasing emails.
3. Now that mobile phones have significant processing power, you can also manage these accounting processes using dedicated APPs. Check your bank balances, send an invoice from a remote location and so on.
4. Many software providers have stock control features and almost all have payroll options and automatic generation (and filing) of VAT returns using the new Making Tax Digital protocols.
5. We recommend cloud software – this means you access your software via an internet browser, it is actually based on a remote server not your PC – as we can directly access the software to help you with any processing issues, and more importantly, view management reports.
6. But, perhaps the most significant advantage of using cloud based software is the ability to view real-time data, to see what is happening right now.

Once you get used to using technology in this way you will be surprised how much time you can save and how much useful information becomes available, at the click of a mouse, to help you run your business.

It is worth underlining that there is a wealth of reporting options beyond the usual profit, cash flow or balance sheet; reports that can be adapted to support your business endeavours. The key is to identify relevant challenges and then design reports that illustrate progress to solve those challenges.

How much will this cost?

Most cloud-based software is provided for a small monthly fee. Depending on the level of detail that you need to record, the monthly costs will rarely exceed £30.

You will need to consider training costs, but these costs are an investment. The payback you will receive will far outstrip any initial expenditure.

We can help

There is no one-size-fits-all approach. The collection of financial data offers almost unlimited scope to represent that data in formats that will be of value to your business. The real skill is not designing the required reports, it’s identifying the original problem(s) and making sure you extract information from your accounting software to manage those problem areas.

Having access to real-time data will not only transform your ability to manage your business on a day-to-day basis.

As the information is sited at a secure location accessible from the internet, we too can access the data and help you use the information to better manage your business.

And we can achieve this remotely, an invaluable facility in these days of continuing social distancing obligations.

For the same reason, COVID disruption, plus Brexit have made it imperative that you keep an eagle eye on your finances. Joining the Go-Digital initiative is a sure way to position your business at the leading edge, ready to go as soon as economy starts to grow once more.

If you would like to discuss how you could benefit from using or developing the use of a cloud accounting solution, now is the perfect time to place your toe in the water. Call any time to discuss your options.