Accounting software is a crucial element for pretty much every business, in any industry. For businesses who haven't yet made the move, it can be daunting considering moving to a new system.

But actually, there are some great reasons to move over to cloud accounting software for small business owners.

Lets find out why you should embrace the benefits of cloud accounting.

What is Cloud Accounting?

Cloud accounting is a system where your financial information is stored in the cloud, aka on the internet. The benefit of this is that your accounts can be accessed from anywhere with an internet connection, which means you don't need to worry about having access to your own computer, servers or software programs.

Using cloud accounting software also allows you to share data with other relevant parties. This might include other departments of your business, or members of your team, your accountant or bookkeeper or even customers and suppliers in some instances.

Why Cloud Accounting is Good for Small Businesses

The reasons why cloud accounting is a game-changer for small businesses in the UK are many and varied.

For starters, it eliminates the need to install software on one or multiple devices. Licences for using software on networked computers can quickly get expensive, but the subscription model usually offers good value.

Cloud accounting also gives you access to financial data anytime, anywhere-and that's something that's not possible with an on-premises solution. No need to email spreadsheets containing sensitive details to staff in different offices. Instead, with multi user access, they can log in with their own access and can see live information.

There is often also an option to give certain people limited access. For example some parties may be able to add data, but won't be able to access the full features of the accounting tool.

Most cloud accounting software applications also integrate with your bank accounts and other software such as sales CRMs (e.g: Hubspot, Salesforce or Zoho). This means that you'll have access to real time financial data, allowing you instant access to key financial information.

Compared to traditional accounting software applications, this is a great time saver and allows you to see details such as accounts receivable or up to date sales records.

In addition to this, cloud accounting software is often protected by up to date cybersecurity protection. This means that the provider will be protecting your data from unwanted access, although you need to also use security best practices too.

Data security is normally a key selling point for cloud based software, and any cloud accounting system should have a robust suite of data protection tools.

How to Find a Cloud Accounting Service

You'll need to determine your accounting needs before you start looking for a cloud accounting service. If your business is just starting out and doesn't have much in the way of income or expenses, then a basic package might be all that's required.

On the other hand, if your company has grown it may make sense for you to invest in more robust software. This might include payroll management tools and other features that can help streamline daily operations.

Anyone can sign up for and use their own online accounting software. However, many modern accountants will also offer access to a cloud accounting system as part of their service.

For example, here at Henderson and Co Accountants we include access to cloud based accounting software as part of our service. This means that we will be able to remotely reconcile bank data, and complete tasks such as processing payroll, bookkeeping and accessing data for tax returns.

Of course, you don't have to use your accountant's choice of online accounting software. Many businesses will choose their own package and then give their bookkeepers access to accounting software as needed.

Are there any downsides to cloud accounting?

Although cloud accounting is a game-changer for small businesses, there are some downsides to consider.

The most significant concern is security and privacy risks. As with any online service, there's always the possibility that hackers could get into your account and steal information or money from you. As we mentioned above, it's important to keep your data secure and use strong passwords and avoid sharing data with people who don't need access.

It's also important to ensure that when you store data, you comply with privacy laws such as GDPR. While accounting software typically does this, there may be additional measures you need to take such as making sure any backups are stored securely.

Another issue is the cost of subscriptions for cloud based accounting systems. Of course cloud accounting services aren't free - although they're typically cheaper than traditional accounting software alternatives such as QuickBooks Desktop Pro Edition (around £700 to over £1000 per year, with limited users).

Although the desktop software may come bundled with extra features like inventory management tools, they also require additional purchase fees if used independently from other Intuit programs like TurboTax Online Tax Preparation Software.

Are Xero, Quickbooks or Sage Accounting cloud based?

All three cloud accounting software packages are cloud-based, meaning they run on the internet and your data is stored in a secure server.

Here at Henderson and Co Accounting, we offer our clients the use of Quickbooks cloud accounting. Of course, clients can also choose whichever system they like if they do decide to work with us as their cloud accountant of choice.

If you already use your own cloud software provider and you want to outsource your data entry and bookkeeping, no problem. Get in touch and we can discuss how we can fit into your accounting process.

How Much Does Cloud Accounting Software Cost in the UK?

While cloud accounting software is a game-changer for small businesses in the UK, it can be tricky choosing the best option based on costs. While cloud based accounting offers a comprehensive solution to all your financial needs, from payroll and invoicing, to reporting and analysis, not all packages come with everything you need.

So, what is the cost of cloud accounting? And how do you know which package is right for you?

The answer depends on what kind of service or features are included in each package - but most providers charge their clients on a subscription basis either monthly rolling or annual packages.

Let’s take a closer look at the pricing for some of the most popular cloud accounting software packages in the UK:

Xero

Xero offers three pricing plans - Starter, Standard, and Premium. Prices start from £7 per month, although this includes a 50% discount for a trial period of six months. After this, the price goes up to £14.

The other levels are then £14/£28; £18/£36 and £24.50/£49 using the same discounted six month period.

Services such as payroll, project tracking and expenses management are actually additional add ons for all levels.

Quickbooks

QuickBooks offers five pricing plans - Self Employed, Simple Start, Essentials, Plus, and Advanced. Similar to Xero, Quickbooks also offer a 10x discount off all plans for six months.

• The cheapest package, Self Employed, starts at £1 and then jumps to £10 afterwards.
• The Simple Start plan is priced at £1.40/£14 per month and includes basic invoicing and expense tracking.
• The Essentials plan is priced at £2.40/£24 per month and includes additional features such as bill management and time tracking.
• The Plus plan is priced at £3.40/£34 per month and includes all the features of the Essentials plan plus inventory management. The Advanced plan is priced at £7/£70per month and includes all the features of the Plus plan plus advanced reporting and analytics.

Quickbooks also offer a one month free trial on all of the above packages.

Sage

Sage Accounting offers three pricing plans - Accounting Start, Accounting, and Accounting Plus.

• The Accounting Start plan is priced at £12 per month and includes basic features such as invoicing and expenses management.
• The Accounting plan is priced at £26 per month and includes additional features such as bank feeds and cash flow forecasting.
• The Accounting Plus plan is priced at £33 per month and includes all the features of the Accounting plan plus project management and inventory management.

Sage offers 3 months for free so you can find out if this is your accounting cloud solution of choice.

Getting started with your cloud accounting partner

If you're ready to get started with your cloud accounting software, but also need an accountant to manage your financial processes, get in touch.

Here at Henderson and Co Accountants, we offer a full range of accounting and bookkeeping solutions to business of all sizes in the UK. Our cloud accounting providers of choice are Quickbooks, which we offer to our clients as part of our package. Or we can work with your choice of cloud accounting solutions.

If you're a small business owner, sole trader or freelancer looking for simple accounting support, or even to use cloud accounting as your business grows, get in touch for a chat.