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Is Online Accounting the Next Big Thing?

Posted on: Friday, 24 March 2006, 09:00 CST

By Bartram, Peter

Finance

ONE DIRECTOR WHO won't be worrying about irritating tax changes Gordon Brown will introduce in his budget is Louise Kelly, who runs Guildford-based business Verniquet Consulting.

Kelly spends less than 15 minutes a month doing her accounts online-which gives her more time to be out earning fees from clients.

She explains: "I used to have a normal accountant and would have to gather up all the receipts and documentation to send to him. Doing it online makes the whole thing much more simple."

Kelly is one of around 350 small businesses who are using Accountsnet.co.uk, a new online accountancy service set up by software developer Andrew Phee and his accountant wife Linda. Phee, whose background is in developing internet systems for banks, got the idea from the chore of doing his own accounts.

He says: "I used to buy a desktop package and do the accounts the best I could. But, at the end of the year, when I took everything to my accountant, there was always something I'd done wrong."

The aim of Accountsnet is to free micro-businesses-usually only a handful of people and sometimes sole traders-from the routine of account form-filling. It also provides a source of online advice.

Subscribers log onto Accountsnet using a common internet browser. They key in their transactions, such as invoices and disbursements, and the system does the rest. It sends them an e-mail to remind them when their VAT is due and lets them log onto an onscreen form to input the figures. It handles payroll as well as year-end tax returns.

The Phee's small team of accountants keep an eye on their clients' accounts and can alert them if anything is going wrong. Says Phee: "They can ask us questions on a weekly, or sometimes daily, basis at no extra cost, which means they don't fall into the trap of running their business incorrectly."

The service typically costs 60 a month plus VAT, but larger companies might pay more.

Kelly finds the ability to ask a question whenever she wants an advantage. "I had a query the other day about whether I can claim a carbon neutral donation as a business expense," she says. "Apparently, I can if the recipient is a registered charity."

But not all directors are convinced the online approach is right for them. Sheila Gimson is joint managing director of Portfolio Communications, a 20-person PR firm based in central London.

She says: "Doing accounts online seems attractive but I'm not sure accountants in a remote location could really get to know a growing business well enough to provide the in-depth advice it needs."

Gimson points out that Portfolio's accountants are so familiar with the detail of the company's finances, they help to speed up production of the annual accounts. And she points out that many of the nitty-gritty problems that cause directors so much trouble can only be sorted out by reference to original documentation, such as invoices and receipts, which even those doing online accounts have to keep.

Phee acknowledges there are some directors who still like to see "a guy in a suit". But he is convinced there is an even bigger demand for online accountancy and has plans for expansion. "We're thinking of producing a bookkeeping only version of our system," he says.

Peter Bartram

TOP SMALL BUSINESS FINANCE GRIPES

* Simplify PAYE

Especially maternity leave and working tax credit, which are a nightmare to calculate.

* Reform National Insurance

Give it the same tax treatment as income tax so there aren't anomalies, such as treatment of use of home phone for business calls.

* Make allowances clearer

So that there's not so much confusion over what can and can't be offset against income as an expense.

* Be consistent

So that policies, such as the muddle over what could be invested in Sipps pensions, isn't repeated.

* Reform inheritance tax

So that directors living in high-cost property areas aren't penalised unfairly.

''Doing it online makes the whole thing simpler"

Copyright Institute of Directors Mar 2006

Source: Director

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