Finance

Why the Future of Tax Is in the Cloud

Many modern businesses have accountancy firms manage their money on their behalf. From tax return services to payroll, this off-hand approach often leaves them blissfully unaware of the changes affecting the way their money is handled. But not every business uses financial services as a support structure, meaning it’s much more important they stay aware of developments within the industry. 

Which brings us neatly to cloud accounting. 

What Is Cloud Accounting?

Cloud accounting software is a digital solution that helps you manage your business finances and accounts via computers and smart devices. It differs from traditional accounting software because it’s remote access. 

In simple terms, that means instead of installing a locally operated program, you download an app, or you visit a website that allows you to sign in and use accounting software hosted by a business on their servers. You don’t have to buy a singular piece of software to install on your IT systems, you instead often obtain a monthly or annual subscription and access the service using the internet. 

Cloud accounting works in the same way as local accounting software. You can do everything you would on traditional software — balance books, submit invoices, manage expenses, etc. The only difference is, the software solution is accessed on an external server. 

Why Is Cloud Accounting Worth Paying Attention to?

The primary benefit of cloud accounting over other types of accounting — be that local software or old-fashioned pen and paper records — is it’s all accessible remotely. You can sign in anywhere with an internet connection and access your cloud account systems; whether you’re in the office, on the road, or in a different country. 

This newfound accessibility rapidly develops the versatility of your money management systems. It presents your business with fantastic opportunities to monitor and maintain accounts without reliance on a central document facility. 

Other key benefits include the fact that you don’t have to repeatedly update your systems as software becomes outdated or new features launch with new packages. The cloud software is updated directly by the provider and as a subscriber, you gain access to changes simply by logging in. 

Why Is Cloud Accounting so Relevant Now?

Government bodies are well-known for living behind the times, but eventually, they start to catch up. A great example of how this relates to accounting is in Great Britain, where the organisational department in charge of taxation (HMRC) has put forward regulations that state all VAT returns must be handled and submitted digitally. Not only is it mandatory to submit VAT returns digitally, but it must also be done through certified software.

This requirement, in effect, forces UK businesses — or any brand paying UK VAT tax — to incorporate some kind of accounting software into the management of their accounts. Without it, they cannot legally operate. While this is currently a system that only applies to VAT returns, it’s introduction indicates the beginning of a new era of digital tax. It is likely we’ll see this sort of practice adopted more widely soon, in a trend impacting not just the UK, but the rest of the world. 

But what has this got to do with cloud accounting software?

With the future of taxation set to be digital, now is the time for businesses to make sure they are ready to meet demands. Proactivity is always more effective than reactivity when it comes to smooth day-to-day operations. If you’re operating on outdated formats, such as pen and paper accounting or old software, you may not be able to meet the demands of changing tax submission practices. 

Instead of adopting a wait-and-see attitude, businesses should look to the future and consider how they’re going to make sure their accounting practices are ready to adapt to whatever requirements may be set within the next five or ten years.

Cloud accounting can help businesses stay proactive.

Opting for the right service means you’ll have access to the latest software solutions, as cloud-based platforms are always maintained and upgraded to retain relevancy and competitiveness. This means when the demands on your business changes, cloud-based systems ensure you’re prepared to meet them. 

Unlike current stagnant processes that never change, cloud solutions are always prepared to resolve the latest consumer problems — giving you the security you need. If they weren’t capable of doing so, they would not remain in business.