While the switch to making tax digital (MTD) for sole traders and landlords has been delayed it is still due to be introduced in phases beginning in April 2026 and will eventually affect self-employed individuals and individuals receiving property income with annual gross income of £30,000 or more.
Most businesses already conduct their banking online, so that moving accounting to the cloud should pose few problems and offer many advantages. Many providers are in fact now sunsetting their desktop software precisely because it does not offer the flexibility and convenience of cloud solutions.
- Accessibility – Cloud accounting software, such as Xero or QuickBooks, can be accessed from anywhere, anytime, if you have an internet connection. This makes collaboration with your bookkeeper and accountant easier as well as allowing for working remotely.
- Scalability – Cloud systems scale easily as your business grows. You can add users and features as needed.
- Automatic updates – The software is always up to date with the latest features and most importantly security patches. No manual updating is required.
- Disaster recovery – Your data is securely stored and backed up in the cloud. This makes recovery from hardware failure or natural events much easier.
- Reduced costs – Cloud accounting systems often have lower upfront costs compared to desk top solutions.
- Integration – Cloud platforms make it easy to integrate with other cloud software you use, like payroll, POS systems, etc. This improves workflow automation.
- Data analysis – Many cloud accounting platforms provide built-in reporting and analytics to help generate business insights from your financial data.
Why not just use spreadsheets? A small business owner I know well had an Excel spreadsheet that was updated at the end of every month. A training course I went on recently compared keeping your books to school homework. You need to be able to show that you have done the homework, and you need to have current financial data on your business to be able to operate efficiently. It’s no good telling HMRC that the dog ate your accounts. So, waiting until the end of each month to find out how much money you have made and to record your transactions is not helpful.
Under MTD you will need to submit quarterly tax returns so getting into the habit now of working with an easy-to-use cloud-based accounting package that is accessible from anywhere, including your Smartphone makes sense.
One of our goals at Hydref Accounting is to support the many bookkeepers who aren’t bookkeepers, those people who have ended up looking after the finances of the business by default, as well as those with an accounting background. We work with platforms like QuickBooks and Xero because they offer the best long-term solutions to understanding your numbers. Hydref’s training supports users with getting the best from their chosen platform so that it can guide the financial decision making of the organisation. Get in touch 03333 449270 or book an appointment through my Calendly link.
