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.
Licenced Accountant in Brighton