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In 2017, our review of various studies by accounting bodies and s/w suppliers indicated that only a very small minority – approximately 20% – of SMEs were using online or cloud accounting systems (also known as Digital Accounting).
We were keen to find out what’s happened since then due both to our continued belief in the value of such systems and HMRC’s Making Tax Digital initiative which encourages their uptake.
Getting data on cloud accounting is rarely easy, but a 06/2022 report from The Open Banking Implementation Entity (OBIE)[1] provides some useful insights into how SME’s currely view cloud accounting systems and how the market is rapidly changing.
Key conclusions from the report are as follows:
[1] The Open Banking Implementation Entity (OBIE), set up following a review by the Competition and Markets Association involves all the leading UK banks and is responsible for setting standards in making bank transactions securely available to third parties and is thus relevant for the automatic feed of such data into most cloud accounting systems today.
Within the main report, an OBIE pilot study found that 45% of respondents were using cloud accounting service.
However, this hid a wide take-up rate increasing to 80% of businesses who are VAT registered or have an annual turnover exceeding £250k.
Reflecting the rapid change, 75% of current cloud accounting users have only been doing so within the last three years.
A significant majority (79%) feel that they get good value for money. 40% gave the top score of very good value. Only a very small minority (4%) felt that value for money was poor.
A very high proportion of small businesses reported that cloud accounting provided them with :
Enhanced productivity and efficiency – we found very strong evidence that these services were helping them to improve business efficiency (+82%) reduce internal costs (+48%) and reduce external costs (+53%).
[1]The Open Banking Implementation Entity (OBIE), set up following a review by the Competition and Markets Association involves all the leading UK banks and is responsible for setting standards in making bank transactions securely available to third parties and is thus relevant for the automatic feed of such data into most cloud accounting systems today.
If either you’re not using a cloud accounting system or you’re not seeing the benefits if you do, then maybe it’s the time to look again either on your own or with some suitable professional help.
In 2017, our review of various studies by accounting bodies and s/w suppliers indicated that only a very small minority – approximately 20% – of SMEs were using online or cloud accounting systems (also known as Digital Accounting).
Most sole traders adopt a 5 April year end which is the simplest approach and avoids having to allocate one year’s worth of results over two different tax years. Note that a tax year end of 31 March is treated in exactly the same way and is thus probably the best date to use.
The basic tax benefit is that rather than getting the usual 19% tax relief on operating costs, activities classified as R&D get 44% tax relief.
A specific problem, a desire to reduce accounting costs or you just want some general financial advice from qualified experts? Then call us NOW
We are UK based financial consultants, offering services in Accounting, Valuations, M&A, Project Financing and Investment Appraisals.
We engage across all industries and have a special interest in the environmental world.
