The last few years have seen massive advances in the quality of online software – most recently due to the widespread adoption of cloud computing. Being at the forefront of technology themselves, what should contractors look out for when promised ‘online accounting’ by a prospective specialist accountancy firm?
What is online accounting?
Almost all specialist contractor accountants now claim to provide ‘online accounting’ for their clients. Unfortunately, without further inspection, it is hard to establish how good these systems are, without asking for a demo.
From our experience, there is a massive range in quality between software provided. In the worst of cases, ‘online’ simply means that you can update a monthly spreadsheet detailing your income, expenditure and expenses – and then email it to your account manager, or submit it via some rudimentary online system.
At the other end, there are a number of truly cutting edge accounting software packages out there – either third party ones (such as the popular FreeAgent), or in-house systems, designed by contractors for contractors. In fact, some contractor accountants who advertise widely on the web now offer purely online accounting (with ‘real person’ support if it is required).
Most accountancy firms sit somewhere in the middle, using their own systems of varying quality, or customised versions of generic accountancy platforms.
What should you be able to do online?
These days, at a bare minimum, you should expect to be able to submit details of all your transactions, invoices, expenditure and expenses into an online system. Accountancy firms operate in different ways, so they may prefer to check your data before uploading the information themselves… or they may allow you to enter your data directly to a realtime system, which they can also access in order to amend or correct data.
The more advanced systems will allow you to upload bank statements, issue invoices directly to clients, provide you with accounting deadline reminders, and even submit your quarterly VAT returns direct to HMRC.
What to look out for
We would recommend you make a point of taking an online demo of any accounting systems you may be offered, before signing up. The best systems will save both you and your accountant a lot of time and hassle, but the worse will simply make your life difficult. If ‘online accounting’ is on offer, find out exactly what this means and what functions can be performed.