‘I absolutely love Jim Henson’s The Muppet Christmas Carol.
If you have ever seen it you may remember the rats in Scrooge’s office each sitting at a desk furiously writing in great big books double A3 books with a quill and jar of ink. When they receive a bill they enter it’s details into the book (or ledger as they were known) and enter the amount in the appropriate column – one for coal, one for hankerchiefs and so on.
They would add the totals using the ‘rithmatic learned at school. In reality there would be a separate ledger for sales and for cash payments. As you can imagine this would be time consuming, the opportunity for errors would be ever present and those poor rats needed to keep all of the invoices and receipts too.
Would Scrooge use cloud bookkeeping?
If those rats were using cloud bookkeeping then Scrooge could be working from home…in fact the bookkeeping rats could be working at home as well. Rather than record each payment onto the cash book ledger using a quill, they would connect the Scrooge and Marley bank account to the cloud bookkeeping software and the transactions would flow straight in.
Bob Cratchit would know that rules can be set up to automatically allocate the coal and hankerchiefs to the correct columns within the software, saving the hassle of the rats having to do this and risking incorrectly adding the figures when totalling them at the end of the period.
This saves Scrooge money!
Scrooge wants to know how every penny has been spent so he wants to be able to log into his online bookkeeping software package at any point and instantly see how much money his customers owe him and how little he has spent on coal to keep his staff warm. He also wants to know that when the accountant comes after his year end that all of the information will be there in one place.
Scrooge’s accountant is almost as grumpy as he is and does not like to pay his staff to check through his ledgers, so he is happy that the records are kept so well and Scrooge is happy that his accountant has charged him less.
This saves Scrooge money!
So what about when Michael Caine…I mean Scrooge gives the little rabbit boy money to buy a turkey for Bob Cratchit? Obviously Scrooge is well aware that as this is a gift for an employee costing less than £50, not a reward and not exchangeable for cash he can treat this as a trivial benefit under 323A ITEPA 2003* and therefore enjoy a deduction against corporation tax and know that there is no P11D, NI or income tax liability on the employee; he therefore wants to ensure he has a receipt.
The scene was cut before Scrooge asks the boy to return with the receipt but with cloud-bookkeeping he would not need to worry as the boy would take a photo of the receipt with his phone and send it to Scrooge or even better, Scrooge could have given the boy the email address of his business’s document library, then he could have sent the photo direct from his phone to Scrooge’s cloud package. This way Scrooge’s bookkeepers can log in, see the document and match it against the relevant payment. Scrooge does not need to retain every bill and invoice so he no longer needs rent space from the building next door to store his paperwork.
This saves Scrooge money!
When Bob Cratchit was scouring the internet trying to figure out the best bookkeeping product to use he had strict instructions from Scrooge that it must not involve a large payment.
Thankfully for Scrooge cloud bookkeeping packages work on a subscription basis typically with a one month contract meaning that he can sign up to one and pay anything up to around £30 per month and not be tied into anything long term.
This saves Scrooge money!
Unlike Scrooge, Bob Cratchit is forward thinking and so he wants to ensure the business is not left behind with out of date software, nor does he want to have to pay for an upgrade next year (Scrooge definitely does not want a surprise bill). Following Bob’s research into the various cloud bookkeeping software products that exist he now understands that the software package they use is internet based and so there are no manual upgrades – everything is upgraded in the background without interrupting his work.
This saves Scrooge money!
Do you remember the two guys collecting for charity? There was a pink one and a green one. Scrooge suspects that after he treated them so badly they might target his online bookkeeping package in order to access the bank and steal Scrooge’s money to give to charity; Scrooge does not want this! However, Bob reassures Scrooge that these products are extremely safe and no do-gooders should be able to access the account and use it to steal money.
If you got lost in my Muppet Christmas Carol analogy, let’s just try and summarise the key points:
- Cloud bookkeeping is a way to keep control of your business’ records. The day to day transactions are recorded on a bookkeeping package which in itself is accessed online.
- The ‘cloud’ bit means that unlike traditional computer bookkeeping software which is stored on your PC or laptop, this is stored ‘in the cloud’ (a server far, far away and accessed online) so even if the computer is lost or stolen you can log into your system and access your records from any computer, phone or tablet.
- You, your bookkeeper or a combination of the two can enter your business transactions and your accountant can access them at year end. There is only one live version (which can be accessed by multiple users even at the same time).
- You will always have the most up to date version of the product – there is no installing with a disc or downloading updates like in the old days.
- There is usually a single month cancellation period and it is typically operated on a subscription basis so you pay a low amount each month, not hundreds of pounds each year.
- Most products will link to your bank and can be set up to code things in a certain way automatically, making things so much easier.
- With the vast majority of these products you are able to attached copies of receipts and invoices to transactions within the software. HMRC are quite happy with electronic copies and do not insist on you keeping physical copies too.
We helped Bob Cratchit move onto ‘the cloud’**. If you want to save money like Scrooge please get in touch.
* 323A ITEPA 2003 would of course not be found in the tax manuals of 1830s Dickensian London
** We did not help Bob Cratchit move onto ‘the cloud’
