Once a year you (or your bookkeeper) tip a box of assorted invoices and receipts onto the desk and start the long haul of trying to match bits of paper you can barely read anymore with credits and debits on your bank statement that you’ve long since forgotten about.
Why did you spend £20 at the Post Office last May? What were you doing in Southampton and why did you book an overnight there? And how come you can’t find any record of payment of that invoice from last summer?
As recently as 2017, the UK200Group revealed that 65% of UK firms didn’t use any form of accounting software. That will have inevitably changed thanks to Making Tax Digital (MTD), but 3.5 million businesses aren’t registered for VAT, so aren’t affected by MTD (yet).
So millions of businesses are still doing their accounts as they always have. Each year, most of them probably swear that next year they’ll do it better. Then next year arrives and they once again find themselves swearing at their paperwork, Excel or each other.
It really doesn’t have to be like this.
Why should I switch to online accounting?
1. Your financials are always to hand, wherever you are
If your accounts are automated at all, chances are they’re sat on one pc in the office. Unless you’re sat in front of it, you won’t be able to access the information. So if your client, supplier or accountant calls to ask you something about a payment or invoice from last month, you won’t be able to answer the query until you’re back in the office.
And then there are your receipts. Usually, they sit in a box. But when your accounting is online, you take a photo of each one as you receive it and it gets linked to the corresponding payment from your account. Switch to online accounting and every payment you receive and every bill you pay all pass through the app on your phone, so you hold your entire financial state of play – and all your historical information – in your pocket.
2. Real time insight
Manual bookkeeping that you do once a year is dumb bookkeeping. It provides nothing more than historical information and something for HMRC to get their teeth into.
But when you switch to online accounting, the picture of your financial performance builds throughout the year and you can use that information to make decisions in real time - when they can make a real difference.
What does that mean in practice? Suppose you’ve been undercharging a client for the past 12 months. Would you rather know about it now, or next year once you’ve done the books?
3. Get more from your accountant
When was the last time your accountant gave you a juicy nugget of information that helped you make a bigger profit? If your answer is, “Erm…” then consider this: The Tax Farm’s accountants don’t just do your accounts. They do lots of accounts, many of them for people in a similar line of business to you.
That means we can pick up on industry trends in real time that you might never otherwise spot, and that could help you become more efficient.
4. Cut the storage, boost the security
Somewhere in your office there’s a room, office or shelf stuffed with six years’ worth of financial information. But when everything’s online, you don’t have to store it physically.
Not only does that free up valuable office space, it also means your information is stored in the cloud, not a cupboard. So if the worst happens and HMRC asks to review your books exactly the same week as a fire destroys all your paper records, you don’t have to the added worry of reconstituting your records.
5. Save time, simply
How much time do you spend doing your bookkeeping each year? Switch to online accounting and all of that time is absorbed into the spare few seconds when you want to give your thumbs something to do. You’ll find keeping up to date with your financials becomes every bit as addictive as Candy Crush (well, almost). Which mean that day you set aside for your bookkeeping can now be devoted to something else.
6. Get ahead of the game
At the start of this post, we mentioned Making Tax Digital. The things is, if it doesn’t apply to you yet, it will soon. The Government has plans to make every business digital over the next few years. So if putting your accounting online is inevitable AND doing it now could save you valuable time, hassle and money, what’s the point in waiting?
To explore how dragging your accounting kicking and screaming into the 21st century could make your life a whole lot easier, talk to us.