Almost everyone that uses the internet already uses cloud computing. Rather than run a mail programme on their own computer, people like the convenience of Hotmail or Gmail, which allows them to access their inbox at any time from any smart phone or computer with an internet connection. Increasingly other business services are being offered through cloud computing e.g Amazon and eBay as this enables small traders to start up a business without the large up-front costs of investing in servers and security systems.
There are a number of online accounting packages available which make the accounting process easier for small businesses and have the potential to increase profits too.
Online accounting uses cloud computing to create real-time reporting. Information can be shared among your staff, customers and accountant. Information is drawn automatically from online banking saving time-consuming data entry. A major benefit of online accounting is that all your data is stored securely, backed up automatically and levels of access set to the user ensuring that sensitive information is kept confidential.
Real time Information is now required by HMRC for payroll reporting as it is the only way the tax authorities can keep track of their finances. This approach is now available for everyone running a business for their own accounts. You can prepare invoices away from the office on your smart phone or laptop and email it to your customer as you finish a job. Invoicing quickly is key to getting paid quickly and resolving any disputes as they happen. Long delays in invoicing can lead to a loss of income as you divert your attentions from running your business and in extreme cases your customer may no longer be trading.
Commercial customers often use poorly presented invoices as an excuse for lack of payment. If you switch to an online system you should never get this repeated to you again. Invoices sent by email can include links to online payment methods making it even easier for your customers to pay you.
Online accounting systems can get automatic feeds from your bank account to make sure you never miss a transaction on your account and eliminate the need for time-consuming and error-prone manual typing of payments and receipts. If you are paying your accountant to do this you are wasting your money, switching to online accounting will save you money.
Whatever system you use for storing your accounting data there are risks involved, but probably the highest risk is borne by the majority of small traders who keep all their information on a single laptop. If your laptop is not backed up every day you run a significant risk of losing everything either due to a failure of your computer or from loss or theft. By using online accounting, all your information is automatically backed up. If someone steals your computer, there is no financial data saved on the hard drive to be lost. If you upgrade your computer or change from PC to Macintosh there is no painful process of copying all your data to your new machine. If you have staff as well as use an accountant, you can set up different levels of access to allow everyone simultaneous access.
One of the greatest benefits of online accounting is that you can decide how much financial work you want to do and how much you outsource to your accountant. The division of tasks is not set in stone and if you find you are getting busier with your business you can hand over more to your accountant. Alternatively as you gain a better understanding of your finances you can take work back from your accountant saving you cash (even if it takes up more of your time).
Online accounting allows you to have a more flexible relationship with your accountant and what’s more rather than wondering what you are paying your fee for most of the year, you can see exactly what your accountant is doing for you.
For more information on an accountancy firm that can set you up with online accounting and also provide the more traditional services you expect from an accountant please contact Alterledger or visit the website alterledger.com.
Alterledger Ltd is licensed by the Chartered Institute of Management Accountants and registered with the Information Commissioners Office.
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