“Cloud accounting” is basically another way of saying online accounting - accessing a web-based programme to manage and process accounts, invoices, and tax returns. It’s not intended as a total replacement for flesh-and-blood accountants, but as an additional service for small businesses, contractors and freelancers to get a better grasp of their financial situation. So what are the benefits?
Firstly, there's the cost. Accountants don’t come cheap, and obviously the more information you want your accountant to provide, the more you’re going to have to pay for it. By using a cloud accounting programme to give you an overview of your money’s activity, you can use your time with your accountant for discussing tailored and specific advice about how best to deal with your finances.
Another benefit is portability. Using cloud software means that the information is not tied to one computer; so it can be accessed anywhere. If this gives you security concerns, it’s worth remembering that this is something you’re already familiar with if you’ve ever used online banking or email. Online access benefits small companies because different people can work on the same accounts, inputting their own information from wherever they happen to be. Furthermore, because the information is saved in the cloud, it doesn’t run the risk of being lost if a single computer breaks down (as would be the case when saving accounts on a desktop application).
As well as being available anywhere you have an internet connection, cloud accounting also means your data is available at any time. Whereas actual accountants are bound to office hours, you can access online data instantly - any time of day or night. This is much quicker and easier than having to make an appointment to check some figures, and puts you in control by giving you the knowledge you require to make your decisions.
One of the most stressful things for a freelancer or small business is worrying about unexpected tax bills. If you forget to put money aside to cover your taxes, you can end up in real trouble and face significant fines for late payment. Using cloud accounting should mean you are forewarned in plenty of time about upcoming tax dates and can make sure you have enough money in the account to pay your taxes.
Automation can also save you time. The kind of information that needs to be included in a small business’s accounts often includes regular payments in and out, and having to input this information manually can be a lot of work and runs the risk of human error. By using a cloud accounting system, however, you could be able to automatically upload your bank information directly into your accounts rather than having to manually input these figures. Furthermore you may be able to use separate expense apps which will enable you to scan all your expenses and have these automatically uploaded into your accounts - meaning you don’t have to input these by hand either. You’ll end up not only saving a lot of time, but also making sure that you reduce the risk of any accidental errors being made.
Finally, the biggest benefit of cloud accounting: is that it gives you time to concentrate on the things you are good at. Chances are you provide your service or product because that’s what you’re passionate about - not because you’re excited by the bureaucracy and management processes involved. By minimising the amount of time you need to spend on managing your accounts, you can give your full attention to actually running and growing your business instead.
The author of this article works on behalf of a digital marketing agency. The content contained in this article is for information purposes only and should not be used to make any financial decisions.
