The age of cloud based systems has come upon us. But what is a cloud based accounting system and how can it help you?
What is a Cloud Based Accounting System?
These are online accounting systems, not desktop accounting systems like Excel, SAGE or Quickbooks. They offer a simple accrual (or cash) based accounting system where you can raise sales invoices, post purchase invoices and perform bank reconciliations (either by utilising an automatic bank feed or importing your bank statements as a CSV file). These systems also offer a range of simple financial reporting functions and can be used to prepare your VAT returns.
These systems are ideal for small or start up businesses to work with their accountants but what are the advantages and drawbacks?
1. Cloud accounting software is hosted on remote servers (where your business software and data is stored on servers at a remote location).
Therefore there is:-
- No need to install software
- No need to upgrade software
- No need for backups
The cloud based provider will do this automatically for you saving you on costs such as installation and upgrades.
2. It allows both the accountant and client to view and share the same information at the same time. This will mean that you can easily post your payments and receipts without utilising spreadsheets and we can immediately access the data to provide a monthly bookkeeping service, prepare management figures and year end accounts.
3. These systems can be accessed remotely (anywhere and anytime) through the internet including laptops, desktops, phones and tablets etc.
1. The main risk with cloud computing is that your data is stored with a 3rd party. Therefore, you must ensure that the cloud provider is reliable and that your data is stored within a suitable jurisdiction.
2. Cloud based systems are dependant on your broadband provider so you must ensure that you have a fast and reliable internet connection.
There are a number of cloud based accounting systems currently on the market including XERO, KashFlow, SAGE One and QuickBooks Online.
If you are thinking about transferring to a cloud based accounting system please speak to us and we can help you decide if it is right for you and your business. Please also see our Topical Tips 163 and 185 for further information.
HMRC is launching seven new investigation task forces. Who’s being targeted this time?
After launching nearly 40 task forces in the last two years HMRC hasn’t yet run out of steam and the latest batch are aimed at different industries as far apart as the Isles of Scilly and Scotland. The new task forces are aimed at the:
Other forces. In the early days we heard through the grapevine that some of HMRC’s task force officers weren’t well informed about the industry sectors they were investigating. That’s less likely to be the case now, plus they are increasingly getting other forces involved, like the police and the Home Office. The latter will check that you’re keeping the right paperwork for any foreign workers you employ
Make the right first move. It’s easy for HMRC to say you have nothing to fear if you aren’t unfairly avoiding tax, but in our experience if it’s looking for trouble it might find it even where there isn’t any. Therefore, if you’re contacted by an HMRC task force we recommend speaking to your tax advisor immediately.
The list below sets out the main reasons why your client would need to fill in a tax return:
They were self-employed for any part of the tax year.
Partner in a business partnership
They were a partner in a business partnership for any part of the tax year.
They were a company director (unless this was a non-profit organisation and they didn’t receive payments or benefits).
Savings and investment income
They received £10,000 or more in the tax year.
They received £2,500 or more in the tax year.
Income from Property
They received income from property during the tax year of £10,000 or more (before deducting allowable expenses) or £2,500 or more (after deducting allowable expenses).
Foreign income that is liable to UK tax:
They received any foreign income that’s liable to UK tax.
Employment and wish to claim expenses or professional subscriptions
They were employed or a director. They have expenses or professional subscriptions of £2,500 or more to claim
They received income from all sources in the tax year of £100,000 or more.
Bankruptcy / Sequestration / Individual Voluntary Arrangement
They may need to fill in a tax return for the year in which they were declared bankrupt, sequestrated or entered into a voluntary arrangement.
High Income Child Benefit Charge
If your client’s income is more than £50,000 and your client or their partner received Child Benefit, they may need to fill in a tax return.
Licenced Accountant in Brighton