Cloud Accounting & Making Tax Digital
The cloud accounting space has been growing rapidly in the UK, predominately focusing on accounting software, but also operational software designed to help make businesses run more efficiently and effectively.
Cloud systems are often run in conjunction (referred to as an App Stack), exchanging information between each other via an application program interface (API), resulting in more functionality from purpose built systems and minimised data entry. There are many reasons why you should consider moving to cloud based systems, these include:
Traditionally, a small business spends money licensing software or buying packages to install onto individual computers. Cloud computing, on the other hand is stored on secure remote servers instead of on your hard drive,
so you don’t need equipment to get the best out of them. The automation provided by cloud computing also saves businesses money. Many companies have slashed their IT overheads because updates and program maintenance are looked after by the software companies.
Flexibility and Reliability
Cloud data storage allows businesses to access huge databases of information without having to operate their own floors of servers, therefore reducing the server maintenance and downtimes. As a result of this remote storage, all you need to access your data is an internet connection and a device that can use a browser or a device that has the cloud software app downloaded. Cloud systems also increase collaboration, allowing multiple people to access your financial data. This means version control and working with varied datasets is a problem of the past.
Security is one of the biggest concerns around cloud computing. Users are particularly concerned with handing over responsibility for data security to their service providers. However, the National Cyber Security Centre highlights that a well-engineered cloud software is better for security because you get the benefit of security at scale. Your software provider will be looking across all of their customers and connections to observe security patterns. This ensures you are protected before any problems reach your business.
The Cloud and Making Tax Digital
You will struggle to find a more commonly used acronym than MTD (Making Tax Digital) in the cloud accounting space at the moment. MTD is the name given to HMRC’s digitalisation process for filing and reporting your tax obligations. The principle behind MTD is to remove manual intervention when transferring accounting records to HMRC and to digitise accounting records held by UK businesses. MTD has become synonymous with the cloud, as in most cases cloud software will allow UK businesses to become MTD compliant at a lower cost point than if they were to implement more cumbersome record keeping systems previously. Using a SaaS (software as a service) model, businesses pay a monthly subscription which includes software updates and maintenance, remote storage and new innovative features designed to drive efficiencies. In turn, this can minimise or stop the need for a substantial cash outlay for the software, setup and server updates etc. Coupled with the other benefits indicated above, it’s not hard to see why more businesses are choosing to move to the cloud. Cloud software will solve the two problems posed by first instalment of MTD.
- Submission of your VAT return to HMRC;
- Maintenance of digital records to the correct standard dictated by HMRC. In some instances, a complete cloud solution is not viable for every business. This is because there may not be a cloud solution suitable for a particular business’ requirements. However, do not worry, we have developed our own ‘bridging software’ solution. Bridging software will allow the submission from non-MTD compliant systems to HMRC
At MHA, we believe cloud technology is the way forward for businesses. The constant evolution and adaptions have opened up a whole new world of innovation for businesses. Our cloud accounting teams have specialist knowledge and can provide a range of services, including system implementation and training.
If you would like to discuss cloud accounting and Making Tax Digital with us in more detail or if you would like to speak with a member of our team, please contact Hannah Farmborough or call on 0207 429 4147 to be put in contact with your local representative.
This article featured in issue 12 of our construction and real estate newsletter series. Read the full newsletter here: Real Estate Matters – Issue 12