What is online accounting software?
There was a time when accountants and bookkeepers relied upon paper to record their numbers. That all changed with the introduction of computers and the advent of the first spreadsheet programmes. Today most bookkeeping systems have been transferred to spreadsheets or accounting software.
The systems we look at here are accounting packages - what they actually do is the record keeping or bookkeeping, not the accounting. These systems are well designed and allow us, as accountants, to add lots more value to your business than simply crunching your numbers.
Today the latest technologies have given rise to cloud accounting or online accounting software. For small, owner-managed businesses, we feel that this has been the most significant development to the accounting and bookkeeping world since the introduction of the spreadsheet.
Online accounting platforms have added significant functionality, which can revolutionise the bookkeeping function of most small businesses. This frees up time for the owner/manager to concentrate on the profit-making aspects of the business, or fit in with an active lifestyle, rather than tying them down in financial admin work.
What are the benefits of online accounting software?
- Ease of Access: This is undoubtedly the prime advantage of cloud accounting. Online accounting means just that – it is online. You can access your businesses financial data from anywhere worldwide, at any time without having to download and install anything on your desktop. All you need is a wi-fi connection. This ability means that business owners can spend more time travelling, gaining new clients and taking care of other important business matters.
- Accessible Data: Smartphone and tablet apps give you information on the move because software housed in the cloud can be easily accessed anywhere there is a connection, at any time and from pretty much any device. Cloud accounting supports those businesses which have mobile personnel like service and sales teams.
- Easy Invoicing: Send professional looking estimates and invoices whilst you are out and about. No need to spend the weekend drafting and sending out the previous week’s invoices, as you can now complete them on the go using your laptop, tablet or smartphone. Track your invoices all the way to payment and manage your cashflow by checking who owes you money at a glance.
- Bookkeeping Efficiency: Bookkeeping is made much more efficient with direct data feed downloads from your bank accounts, to enable the input of data with the minimal level of data input.
- Tracking Expenditure: Purchases and expenses can easily be recorded whilst on the move as most of the packages available provide mobile applications to quickly and easily record the transaction. Some also allow receipts to be scanned by a smartphone and stored as part of the transaction record in the software.
- Integrated Systems: Many online accounting packages can integrate with other systems. Examples include point of sale systems for retail businesses and front of house systems for pubs and restaurants, or stock control and inventory management.
- Real-time Financial Information: Properly managed cloud accounting will give you and your business up-to-date and current financial information (most packages have a financial dashboard that helps this). This can assist you to respond to customers quickly and evaluate business performance by putting financial information at your fingertips.
- Accountant Availability: By having access to your numbers, we can support you throughout the year and complete all your accounting and tax returns well before deadlines.
- Payroll: Many providers also offer simple to use payroll software that is capable of real time information submissions to HMRC and handle auto-enrolment pension contributions.
- Cost Efficiency: Price is always important, so another advantage of cloud accounting is that it can be the cheapest way to go. Firstly, there is no need to pay upfront for all the cost as you would with a desktop accounting package – because you pay monthly. Secondly, unlike buying an accounting software package, it requires absolutely no updates as they are automatically included in the price. The subscription usually includes a technical help service either online, by telephone, or both.
- Backup and Data Security: Security works in similar way to online banking and you don’t need to pay extra for online back-ups, because they are done for you. You don’t need any special servers or desktop configurations – just an internet enabled device to use it.
Is online accounting right for you and your business?
We can help you with this crucial decision. Whilst most online accounting packages broadly offer similar functions, some are better suited to certain types of business than others and each has their pros and cons:
Some were designed with a focus on sales invoices and others provide a more complete bookkeeping system. Some are originally from USA or New Zealand so may not be right for every UK business.
- Sage One offers a very clean, simple and easy to use package that is capable for the majority of small businesses
- Clear Books provides additional features that are extremely useful for contractors and sub-contractors that are required to submit CIS returns to HMRC
- FreeAgent offers a very clean and comprehensive package that can handle most business’ needs
- and Xero provides a very comprehensive system with many add-ons available.
We have reviewed the most popular packages and have narrowed down our preferred online accounting software providers to those noted below. The links will take you to a page containing information about the product which has been supplied from the software provider.
It is important to take time to choose the right one for you and the future of your business. The cheapest option isn’t necessarily the best. And your friend’s recommendation, while well-meant, might not fit the needs of your business.