2011 has been billed as the ‘year of the cloud’ and cloud computing is predicted to boost the EU economy over the next 5 years by £645 billion, with the UK and Germany as the biggest beneficiaries of this growth. Other reports say that cloud is moving faster than any other ‘next big thing’, will be mainstream within 2-5 years, and could represent 15% of the total IT services market by 2014. And Microsoft is reported to be spending £15 million on promoting cloud in the UK in the next quarter alone! But what’s all the fuss about and what does all this mean to the average British company?

In a nutshell, cloud brings together lots of internet technologies and developments under one umbrella and essentially offers a new cheaper, more efficient, and easily scalable way of delivering IT services.

And the good news is that if you can cut through all the hype (and anti-cloud hype) there are numerous benefits for small business: It can help them cut costs, cut IT requirements, offer flexible working, trade internationally, and improve business continuity and disaster recovery policies. In effect, it levels the playing field in terms of access to technology and software, and gives smaller companies the sorts of facilities that previously only the biggest companies could afford.

Here are 5 easy steps to getting your business in the cloud quickly and easily so that you can start to see the time and money-saving benefits for yourself:

1. Move your back-ups and file storage into the cloud (on something like DocSafe) – this is the easiest step because you can continue using all your existing desk-top software but get the cloud advantages of automated back-ups, secure storage and remote access and easy file sharing

2. Move to an online bookkeeping/accounting package (like Liquid Accounts). The main advantages of this are:

• You can sign up and start using it instantly with no up-front costs or time-consuming implementation
• You generally only pay for what you need (like a TV or mobile phone package), can change this as your needs change, and pay by monthly subscription.
• This subscription generally includes things like – free unlimited users, free automated upgrades, free support, free automated, secure encrypted back-ups and storage.
• You have access to you full accounts package, whenever you want, wherever you are (even on a phone or tablet, as long as you are connected to the internet); which is great for home and flexible working, connecting different offices and people who are out on the road
• Most packages also include free remote access or even free software for your accountant or bookkeeper, allowing them to work with you on your day to day bookkeeping, and do your tax and compliance with minimum fuss, and help you implement good financial controls

3. Move all your Office-type software into the cloud – there are already cloud alternatives to Word and Excel available and they’re very similar to the existing desk-top products

4. Build your website on a blogging platform – it’s a cheap and easy alternative to content management. A good web designer should be able to use something like WordPress to create you a website that you have ultimate control of and can update and change whenever you like. This is brilliant for improving your rankings on Google and other search engines and for helping you build a social media strategy – the modern and free (or cheaper) way to directly target your ideal customers, promote your business and get sales.

5. Move to online tax filing – this is becoming compulsory and so is actually an essential step, but it may be easier to do once you’ve moved to a cloud accounting package which should have online filing capabilities built in as the new rules are implemented

Matt Holmes is the MD of UK-based online accounting pioneer, Liquid Accounts Ltd, and Chair of the Cloud Computing Special Interest Group for BASDA (the Business Application Software Developers’ Association) and as such is at the forefront of creating industry standards and guidelines for the newly-emerging field of cloud computing and SaaS.

Why not follow @BroomfieldWales on Twitter to keep up with the latest information on online accounting and other business and financial topics, or simply register for our monthly newsletter.

HM Revenue & Customs (HMRC) have warned that they are planning to clamp down on around 50,000 small businesses over the course of 2011 for failing to maintain proper records and underpaying corporation tax. They say that 40% of all SMEs keep poor records and are likely to owe tax.

HMRC said it will use its existing powers to deal with the worst cases each year from the second half of 2011 and penalties would be put in place “for significant record keeping failures”. More than 2 million small firms that keep their financial records in poor order will be faced with investigation and fines in excess of £3,000.

In very basic terms, you have to keep records going back 6 years and HMRC will be looking for things like:

• boxes of invoices, bank statements, receipts and cheque stubs with no supporting books or analysis,
• books that aren’t regularly kept up-to-date (i.e. at least monthly),
• unaccounted for amounts,
• and books that appear to be compiled from bank statements rather than actual transactions (i.e. written up out of date order).

However, as HMRC claim, there are clear benefits for SMEs (other than avoiding fines and taxes) from better record keeping. It is a proven fact, that businesses are more likely to succeed if they keep good accounting records as they’re able to see instantly if they’ve got enough money coming in, if people are paying them, and are able to plan ahead.

According to a survey carried out by Yorkshire Forward, 80% of businesses who use computerised accounting succeed whereas 80% of businesses who don’t, fail! The key is to focus on creating business intelligence that you can use to your benefit rather than just keeping records for the tax man because you have to.

Here are our 3 top tips on how to do it:

1. If you don’t have time or don’t really know what you’re doing, make use of one of the growing number of virtual assistants. Obviously there will be a cost involved, but what you’re buying is peace of mind and more time to concentrate on what you do best – earning money.

2. Most businesspeople nowadays have a smart phone and there are numerous apps to help you save time and keep on top of your finances, for example there are apps that let you photograph and record your expense receipts (or you can just photograph them and email them to your bookkeeper).

3. Newer online accounting packages are easier to use, instantly accessible, flexible, cheaper and help you save time and money. Most packages will also let your accountant and bookkeeper access your accounts remotely which gives you the choice of doing as much or as little of your own accounting as you’re comfortable with or can afford. It also means that they’re on hand to help you solve problems or rectify mistakes and to give you advice throughout the year and not just at your year end. And doing things this way may also save you money on your accounting bills as there will be less for your accountant to do at key times.

Matt Holmes is the MD of UK-based online accounting pioneer, Liquid Accounts Ltd, and Chair of the Cloud Computing Special Interest Group for BASDA (the Business Application Software Developers’ Association) and as such is at the forefront of creating industry standards and guidelines for the newly-emerging field of cloud computing and SaaS.

Why not follow @BroomfieldWales on Twitter to keep up with the latest information on online accounting and other business and financial topics, or simply register for our monthly newsletter.

Whether it’s flooding, Arctic conditions, or volcanic ash clouds, more and more, extremes of weather and “acts of God” seem to be affecting our businesses (as well as our lives in general) and their chances of survival. During last winter’s snow and ice, 1 in 5 workers failed to get to work, an estimated £600 million a day was being lost, and 2000-3000 companies were predicted to fail. More recently the Centre for Economics and Business Research (CEBR) estimates that disruption caused by the Icelandic volcano cost the UK economy around £100 million per day!

And add to that, the current instability of the economy both in the UK and around the world, and the forthcoming emergency VAT and tax changes, the outlook can look bleak for start-up and small businesses (according to business information specialist, Dun and Bradstreet, 9% of businesses fail every year because of disaster!) However, small businesses that are using cloud services such as cloud accounting (also known as SaaS, software as a service, online accounting software) have a distinct advantage over those that are still using traditional offline desk-top software.

The simple fact is that for most businesses, if you can’t get to your premises (snow/ash) or your premises and equipment are damaged or destroyed (flood/fire/theft) then you won’t be able to access all the essential information that you need on a day-to-day basis to keep things running (customer details, supplier details, accounting and banking details, lists of who owes you money and who needs to be paid, employee and payroll information).
1 in 5 companies suffer some form of major disruption each year, and 43% of those companies who’ve lost essential data never reopen, and 80% of them go out of business within a year.

One of the key features however, of cloud computing and in particular cloud accounting is that you can access your orders, essential accounting, business information and customer and supplier details from anywhere.

Kevin Doyle, MD of Construction Research Ltd found himself stranded in France for 5 days when the Icelandic volcano erupted in April, however, he was able to login to his accounts from his hotel, liaise with his accountant back in the UK and keep his business running: “We originally moved our accounts to cloud accounting with Liquid Accounts because of the uncertainty of internal back-ups and protection against theft and fire. The ability to log on and access full accounting information from anywhere in the world is an added bonus. As long as I have an internet connection, I can analyse and review sales, profits, customer history or indeed customer payments instantly.”

The other issue here is that, as well as remote access, all your data is being regularly, automatically and professionally backed-up to somewhere else other than your office, and usually to more than 1 location. This is normally one of the key features of online software and a great advantage to the small business owner who generally can’t afford an extensive IT infrastructure and the expertise to go with it.

As another cloud convert, Stefan Rask, FD of StarSupply Renewables says: “It was a disaster waiting to happen! One of our brokers remembers in a previous job all their server discs crashing! It’s only a matter of time before something like that happens if you’ve only got one server in your office – like ours in a cupboard.”

And this is backed up by figures from disaster recovery specialists:

• 99% of businesses don’t back-up their essential information daily

• 60% of back-ups are incomplete or out of date

• 50% of attempts to restore essential information fail

• Only 25% of companies who do back-ups store them somewhere other than their office.

All of which means that if your offices are flooded, set alight or broken into, you are likely to lose some or all of your essential information and that you won‟t be able to set up temporarily somewhere else and operate as normal – you might not even know who your customers and suppliers are to let them know what’s happened and what you’re doing about it!

An added bonus of using cloud accounting to make sure that your essential business information is backed-up in several secure locations is that your software (which is also held and managed remotely) is also automatically updated whenever there’s an update, upgrade or improvement. This means that the Government’s change to the VAT rate or any other tax rate or regulation your software will be updated to accommodate this without you having to do anything and you can carry on trading seamlessly without any extra cost, patches or hassle.

In summary then, cloud accounting has a number of benefits that can help small businesses survive and thrive through both the good times and the bad. For the first time, small businesses can now access the sort of flexibility, accessibility and functionality of a grown-up accounting package that would previously have only been available to larger companies with plenty of money to spend, for a minimal, affordable monthly cost (usually around £20 per month). Plus they also have access to the latest back-up and storage technology (again that previously would have been prohibitively expensive) and peace of mind that if the worst happens, they will be able to access vital information and keep trading.

Matt Holmes is the MD of UK-based online accounting pioneer, Liquid Accounts Ltd, and Chair of the Cloud Computing Special Interest Group for BASDA (the Business Application Software Developers’ Association) and as such is at the forefront of creating industry standards and guidelines for the newly-emerging field of cloud computing and SaaS.

Why not follow @BroomfieldWales on Twitter to keep up with the latest information on online accounting and other business and financial topics, or simply register for our monthly newsletter.