As we approach the “Making Tax Digital” (MTD) deadlines, it’s more important than ever for you to know about cloud accounting and cloud bookkeeping.

Right now, more than half of the small to medium enterprises (SMEs) across the UK are already doing all of their bookkeeping and accounting through “the Cloud”. This means that everything is being done online. There are no more wrinkled receipts to hang on to or napkins for jotting reminders on. Check out our bookkeeping service using cloud bookkeeping.

The reason they’re already where they need to be? Because cloud accounting software offers so much more simplicity, flexibility, security, time-saving benefits and reduced overheads.

But, what is it exactly? Well, as a firm currently migrating all of its clients for the MTD deadlines while ensuring every new client we give the big smile to is fully set up before our financial services begin, we wanted to tell you some more.

What is The Cloud?

“The Cloud” isn’t some looming grey entity stuck above our heads following us around all day akin to some sort of futuristic floppy disc or hard drive.

Instead, it’s simply the name given to any website-based application that can house all of your data. All while providing you with the functionality you need to complete your annual or quarterly returns for the tax man. 

It’s almost like Netflix which holds all of your TV shows and movies. Or, it’s like Instagram which holds all of your pictures and videos. The difference is that your cloud accounting software holds all of your important financial ongoings for your business. There’s nothing to download, you simply do it all on their servers.

How is Cloud Accounting Software Different to Traditional Software?

Cloud accounting software is very different to traditional software but not in the way you think. While the overall interface (the bit that you interact with) might be the same, there are many differences in the way that they are accessed and used. 

Traditional accounting software, for example, will have been bought and installed onto a specific computer or device. Then, only that device can access all the data that is created and stored. Cloud accounting software, on the other hand, is bought and simply used online. No matter what device or where you are, as long as you have a secure internet connection and you remember your login details, you can access your financial data. 

Another example is the location of data storage. As files are remotely located on a secure systems server. So, you don’t have to worry about one device being the only backup of your data and it all being lost in the case of a virus or house fire.

Is the Cloud Secure For My Data?

Yes, yes and yes, again. The cloud is the most secure place for your data to exist. As we said, your data is no longer confined to a limited-size storage location on one device. Instead, it’s encrypted and stored in multiple locations on one large server. These servers are often located on an industrial server farm out in the middle of nowhere. So they’re less likely to be found, too.

How Do I Migrate to the Cloud?

Migration to the cloud is a more simple task than you might think. All you have to do is get in contact with your accountant (or find an accountant) and request that they help you. 

Your accountant will get you set up on the right cloud accounting software, such as Xero or IRIS. They’ll also add your conversion balance (in other words, the balances of your accounts at the time you start your cloud accounting journey), which must be accurate.

Then, you’ll be asked to connect your bank account so your invoices and receipts can be matched against the transactions in your account (nobody will be able to make changes to your account!). 

When your account is ready, you can begin to send and receive invoices and notifications through the cloud accounting system.

What Are the Benefits of Cloud Accounting Software?

There are many benefits to using cloud accounting software such as Xero, Sage, IRIS, QuickBooks and more. Here are some of them:

1. You’ll be compliant with HMRC
2. You’ll be ahead of the game for MTD
3. You can save time 
4. You can save money
5. You can save desktop space
6. You can share your accounts with your accountant
7. Your data will be more securely stored
8. You can access your accounts from anywhere
9. You’ll always have the most up-to-date software version
10. You’ll have a live bank feed to your account
11. You can connect online payment methods or machines

So, when it comes to cloud accounting, it’s a whole new world of ensuring your accounts balance and remain up-to-date in the most simple and secure way for you. 

Here at Phillips & Co Accountants, we’re big advocates for MTD and making the transition as quickly as possible before the deadlines approach. We’re also a team of individuals trained and partnered with Xero, which can provide you with one of the best HMRC-approved software packages for your bookkeeping and accounting prospects. If you’d like to hear more about how we work with you and Xero to produce your annual or quarterly reports, contact the team today. 

Alternatively, read our other articles to stay in the know about everything finance and tax related!