Businesses come in all shapes and sizes, from small one man bands to huge multinational and multidepartment corporations. The one thing that they all have in common is the legal requirement to pay tax and to submit tax returns. For smaller businesses, this will usually meant engaging the services of an independent accountant. But the old bricks and mortar model of accountancy firms is beginning to change with the growth of online accountants who are taking advantage of a suite of powerful cloud accounting packages.
In this article I want to look at how online accountants work and why they are proving so popular with small businesses. But first let’s look at the tool of the online accountant’s trade; cloud accounting software.
Cloud Accounting Software
There is a huge range of cloud accounting packages on the market and the competition is fierce. In a way cloud accounting packages, such as Xero and Freshbooks have taken a lot of the complexity out of financial accounting by providing small businesses with the tools to collate, analyse and report their own financial data. This data is then stored in the ‘cloud’ (a remote and secure server in other words)and can be accessed anytime and anywhere, as long as there’s an internet connection.
The online accountant is then able to work remotely on their client’s accounts by logging directly into their cloud accounting software without anyone ever having to leave their office. This allows businesses to get on with their own day to day accounting, whilst still allowing their accountant to jump in and help out on particularly complex tasks.
Whilst cloud accounting tools do allow businesses a great deal of autonomy, they aren’t a replacement for a good old face to face meeting or phonecall with your online accountant from time to time.
What’s the Difference?
There’s no real difference between an online accountant and a non-online accountant. Really the former is just a description of an accountant or an accounting practice that is trained in a specific accounting package and encourages their clients to use that tool so they can work remotely on their accounts. This not only cuts costs and overheads for the online accountant, but it allows their clients greater control, meaning they can take a more advisory or strategic role instead as opposed to an administrative one.
Why use an Online Accountant?
There are several benefits to using an online accountant and I’ve gone over a few of them here:
- Price
By removing so many overheads such as reduced travel and less need for offices in multiple locations, these savings can be passed down to the client.
- Qualified and tech savvy
As, I’ve mentioned, online accountants are really just qualified financial accountants who have taken advantage of the growth of cloud accounting software. As well as being qualified to practice accountancy, this also makes them pretty savvy when it comes to operating the software. Some companies like Xero even run training and partner programs for accountants using their software.
- Accessibility
Because your financial data is stored in the cloud, that means you or your accountant can access it anytime and anywhere, giving your growing business a huge degree of flexibility.
- Up to date
Because cloud accounting software allows your accountant and certain internal staff to update information from wherever they are, you can be sure that the financial data you’re looking at is up to date. With regular software updates and integrations, you can also be safe in the knowledge that the accounting package you’re using complies with all the latest HMRC rules.
- Automation
By automating certain functions such as bank imports, invoice generation, payroll and reporting, your online accountant can spend more time looking at ways to save your business money and advise on future financial planning.
The growth of online accountants is giving small businesses unprecedented flexibility and the cloud software they use is empowering more and more of them to take greater control of their financial affairs, whilst retaining the services of a fully qualified accountant in the process.
About the Author: Andy Hyland has been a qualified accountant for fifteen years and is the owner and director of AK Tax, an accountancy and tax advisory firm based in Medway, Kent. He has spent much of his professional career advising small business owners and has written extensively on finance related subjects. You can connect with Andy on Twitter, Facebook and LinkedIn or call AK Tax on 01634 540040.