IS A CLOUD ACCOUNTANT RIGHT FOR ME?
When it comes to ensuring your accounts are all up-to-date, there are many ways of balancing the books in the internet age. If you’re still more of an old-school accountant, the balance sheet and a pen will always be king, but for the rest of us who are a little more tech-savvy (e.g. cloud accountants), there are a multitude of options.
With the proliferation of Wi-Fi networks, increasingly powerful smartphones and tablets and the growing popularity of ‘the cloud’, accounting has moved from the confines of the office and into a whole new world (the world wide web).
Managing your accounts in the cloud gives you benefits that no other option can compete with. Before we talk about cloud accounting, let’s take a brief look at the advantages and disadvantages of the 4 main accounting systems that are available to you.
1. Do It Yourself
Don’t worry, we’re not talking about getting your local handyman to lend a hand, we’re looking at a manual system of accounting. If you’re put off paying for an accountant and would rather do the books yourself, a manual system is probably the cheapest option available. You might think that you can buy a book and you’re ready to go, but that is often a false economy.
Yes, they’re cheap to start with, but accounts can take a long time to do, especially if you’re a complete novice. As a business owner, chances are your time is a valuable commodity. If that’s the case, then why waste your time learning accounts.
Even with the best of intentions, getting your accounts ready for the end of the financial year can be a long, stressful task. If that wasn’t bad enough, and you do make some errors, the cost for an experienced accountant to correct mistakes and get your accounts compiled will ultimately cost you much more than you paid for the book. Also, the limitations of manual accounts mean that they can disguise all-important management information you need to make calculated business decisions.
If cost is still important you, but you’re a little more confident with software, then using an Excel spreadsheet might tempt you. They certainly offer a more automated experience, by adding columns and giving you formulas to work with, but they still need a level of competence to work correctly.
It should not be attempted if you’re not particularly structured in how you work. One mistake in a formula, or a series of columns, can mean everything you do turns out to be incorrect.
3. Local Systems
By ‘local’ we don’t mean your friendly, neighbourhood accountant, but a system that is stored locally on your computer, rather than in the cloud. It’s not too long ago that these were cutting edge when it came to accounting, but times change. It’s fair to say that using spreadsheets, either Microsoft’s Excel, Google’s Sheets or Apple’s Numbers, are better than the previous two options, but they often come with a plethora of hidden costs.
The software itself is relatively cheap, or free in the case of Google’s Sheets, but it doesn’t have the specific accounting options many people require. If you’re wanting to do very niche things or have it customised in any way, then the costs begin to mount up. Things like software upgrades, security and back-ups are all essential, but often hidden, aspects of the software.
4. Cloud Accounting
The newest ‘kid on the block’ is cloud accounting. It may be relatively new, at least compared to the others, but it also manages to host all the benefits, without many of the drawbacks. Cloud accounting systems are so much better than manual systems, spreadsheet-based systems and desktop software but, just like those other 3 forms of accounting, they can be a hassle to set up for the uninitiated.
Keeping your accounts in the cloud, aka on the internet, does give you 24/7 access to the most up-to-date financial information on your accounts. Providing you have an internet connection, you can access your accounts from a smartphone, tablet or desktop computer. When you’re not using them, you can relax knowing that the sensitive financial data is always secure and automatically backed-up, so you never have to worry.
The fact that the accounts are held remotely, it means that any software upgrades are automatically installed and system downtime is kept to a minimum; all of which saves you time, hassle and money. It also allows your cloud accountant to be able to view your accounts, regardless of where they are based, so they can easily produce year-end reports, saving you money.
There are many accounting solutions you could choose. Like anything in life, some are better than others and some suit one type of business over another. One thing they all share is that picking the wrong one can be costly, and spending time evaluating each of them can be time-consuming. So what’s the answer?
The good news is that we have exactly what you’re looking for. Our experience, knowledge and expertise means that you can get the best of all of these options without any of the pitfalls. The cloud accountant team at Business Dynamo will analyse your business and requirements before recommending the most appropriate cloud accounting solution. We will do the initial set-up, so you can concentrate on doing what you do best, running your business.
We understand that every business is different, with different types of sales, income, expenses, assets and liabilities. If this is the first time you have taken the plunge into cloud accounting, then there are some basic elements to put in place first.
You will need a ‘chart of accounts’. The chart of accounts is your list of sales types, different income sources, expenses, assets and liabilities. It’s unique to you. Setting this up correctly at the outset will save so much time and make it much easier to post your transactions to the right place. It will also make your accounts more meaningful, so you will be able to make much better business decisions.
Of course, given that we’re well into the 21st Century, you may already have a computerised accounting system with your own unique ‘chart of accounts’. If that’s the case, we will convert that for you into the new system. We will convert your current year and previous year transactions (which means you do not need to wait until the year end to make the change). We’ll also convert existing data, such as supplier and customer details.
As part of your initial set up, we will take you through a list of some of the most common tax-deductible expenses and show you how to easily record them into your cloud accounting system. This means you will be able to claim every penny possible against your tax bills and have more money in your pocket. Many of these tax-deductible expenses are often overlooked, which means many business owners end up paying unnecessary amounts of tax.
We understand how expensive and time-consuming running a business can be. If you’re thinking that it still sounds like a hassle, then we offer three fantastic options to get you started, taking into account your experience, time available and involvement going forward.