Online accounting software: what is it and do you need it?
Have you ever found yourself asking the question: what is online accounting software?
If the answer is yes, you’ve come to the right place!
As a small business owner, freelancer or sole trader, it’s hard to pinpoint the most efficient and cost-effective method of managing your finances. We get it – there are a lot of options out there!
You might be thinking that online accounting software could be the solution to your accounting problems. And yep, that could be the answer – but it might not be…
In this blog we’re going to take a look at:
- what online accounting software actually is;
- the pros and cons of online accounting software so that you can see for yourself how it works;
- and whether using an online accounting service – like Mazuma – could be the perfect way to get your money’s worth and free up your time to focus on doing what you do best – running your business.
Keep reading to find out everything you need to know!
First things first, what is online accounting software?
To put it simply, online accounting software – sometimes called cloud-based accounting software – is an online platform that features most (if not all) of the standard accounting processes. These can include:
- Bookkeeping
- Data entry
- Payroll
- Accounts payable
- Accounts receivable
- Asset management
- Cash flow forecasting
- Expenses
- Inventory
Other services are available depending on the provider you use and the package you pay for. There’s no ‘one-size fits all’!
The software is provided by third party companies. To use it, you sign up and pay a monthly fee. Some of the biggest accounting software companies include Intuit QuickBooks, Sage and Xero – we bet you’ve heard of at least one of these three!
How does it actually work?
Although there are lots of different platforms out there, they all work in a relatively similar way.
Each online platform is hosted on remote servers. This means that everything is stored and uploaded remotely – none of the processes are stored on your actual desktop.
You upload your accounting data – whatever that might be – and the information is sent to the cloud for processing on the remote server, then back to you. Once it’s in the system, it’s there for good.
Are there any downsides?
Using online accounting software certainly has its benefits – especially in comparison to traditional accounting! It’s quick, easily accessible and efficient. But there are some downsides that it’s useful to be aware of:
1. Cost
Depending on what package you decided to use, you could be spending a small wedge of money on the software. And remember that if you have year end accounts and taxes to complete, you’ll probably still need to pay an accountant to do that at the end of the year too.
2. Time
Although online accounting software might be quicker than manually updating a spreadsheet, it can still take up a big chunk of your time. Especially in the beginning when you’re still getting used to the new system – and even more so if other members of the company need to use it too.
You’ll need to allocate time to updating the information, uploading relevant documents etc. At Mazuma, we did a survey to find out how much time small business owners spend each month on their bookkeeping.
The results? 86% spent more than 2 hours per month on bookkeeping, while an astonishing 10% spent 10 hours or more. We don’t know about you, but we don’t think this is the best use of their time!
What about using an online accountant?
If you don’t want to get bogged down by a new system, or want to ensure that you’re getting the most for your money, online accounting services could be the way to go!
Online accountants – just like Mazuma – will take care of everything for you.
From just £32 per month plus VAT, Mazuma’s online accountancy package includes more than just calculating your incomings and outgoings.
In comparison, especially, to online accounting software, here is what Mazuma can offer you.
Online accounting software |
Online accountant e.g. Mazuma |
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You send us your paperwork each month – either via Freepost envelopes or upload to the Mazuma app, and we’ll take care of it – a truly hassle-free service.
So, instead of putting your money towards a new online accounting system, you could sign up to an online accountant and get way more for your money. We might be biased, but we know what we’d choose…
Do I need online accounting software?
In a word, yes. But you don’t have to actually buy it yourself…read on!
Why? Because of Making Tax Digital.
Making Tax Digital (MTD) is a new initiative set out by HMRC that requires businesses to submit their taxes digitally. The process has been implemented to make tax returns and submissions easier to manage and submit. Businesses must use MTD compliant software to record and submit their finances.
So, does this mean you actually have to buy the software for yourself?
Nope! You can use an accountant (like Mazuma!) to take care of that for you.
At Mazuma, our software is already compliant with all the MTD guidelines, so you can rest assured that your accounts are being handled in the right way. Not to mention, we’ve been providing online services for almost 15 years, so we know a thing or two about using online accounting software.
So, what now?
At the beginning of this article, we started with one question: What is online accounting software?
Now, we’re going to ask you a question: What should you do if you don’t want to use online accounting software, but you still want to?
The answer? Talk to Mazuma.
Get a free quote today – or find out more about switching accountants to join the Mazuma gang. It’s easier than you think!
We can’t wait to hear from you ✌️
