Every year, small to medium-sized businesses face the challenges that come with tax season. For most, staying compliant and the lack of an organized accounting system are their biggest tax concerns. And with ever-changing tax laws, an organization with poorly structured accounting means that annual tax preparation means devoting weeks to finding misplaced receipts, discovering payments that weren’t properly recorded, and questioning your total revenue received.
Many business owners have grown tired of doubting the accuracy of their tax reporting year after year and have turned to cloud accounting as a result. SMBs and startups are the ones who gain the most from adopting cloud accounting technology — the kind of processing power the cloud offers was once something only available to big companies with huge budgets.
However, many companies who haven’t made the switch want to know how cloud-based accounting is meant to make tax filing easier. Cloud accounting software doesn’t seem dramatically different from traditional accounting when it’s first explained to someone unfamiliar with how the cloud works. At first, cloud accounting seems similar to conventional, on-premise software; its only difference being that it’s hosted on remote servers.
Doesn’t that just mean storing your accounting software in the cloud instead of your computer?
While this is true, cloud accounting beats traditional accounting for its flexibility and scalability. First of all, cloud accounting makes financial information accessible to business owners and employees anywhere they have an Internet connection. With traditional accounting software, access is limited because the accounting software required a dedicated hard drive that is isolated from operations. And when tax season rolls around, cloud-based accounting means:
Organized reporting – Cloud accounting means business owners can store all their receipts, invoices, and customer deposits in one place. Perfectly reconciled books mean avoiding audits. Traditional accounting typically involved sharing of accounting files and forms as attachments via email, causing chaos with storage. Cloud accounting means consolidated and updated data that is available to everyone involved in your tax filing.
Automation capabilities – Cloud accounting software gives you the ability to automate manual accounting processes, saving your accountant or bookkeeper time and increasing efficiency. Automation also dramatically decreases the chances of errors.
Real-time accounting – Real-time accounting means being able to make informed decisions sooner rather than later. It also means closer connections with your accountants because they have the most recent data.
Accessibility – The cloud lets you access your data regardless of your location, allowing better communications between you and your accountant or bookkeeper. Different users using different devices who may be located in different time zones can collaborate and speed up tax filing.
Businesses don’t need to dread tax season particularly if their accounting is in the cloud. The reality is that the complexities of your tax reporting will grow as your company grows. Tax reporting won’t just be your concern; potential investors and lenders will want assurance that you have your finances and taxes in order.
Cloud-based tax prep means fewer errors, getting work done in less time, and ultimately, saving money.
Until the next time,