Article

The benefits of online accounting solutions in a changing business climate

Online accounting gives businesses real-time financial visibility, automates bookkeeping tasks, improves compliance and enables better decision-making through secure cloud-based software.

Last updated 3 Aug 2026 | First published 6 Aug 2020

By Helen Wood, CA 6 min read

Making Tax Digital Bookkeeping Self Employed Online Accounting Limited Companies

Why online accounting has become essential for modern businesses

The traditional approach to bookkeeping for businesses is changing. Although manual records, spreadsheets and desktop accounts software have done the job well for many years, the evolving needs of small and medium-sized businesses (SMBs) require more agile bookkeeping solutions.

Business owners are increasingly working remotely, either at home or on the go. It’s more important than ever to have flexible access to your finances.

Embracing technological advances means you can benefit from automation and integrated AI tools, and save time compared to manually collating accounting information and inputting data.

What is online accounting software? 

Online accounting software is a digital form of bookkeeping accessed through a web browser or mobile app. You can access your financial data anytime and anywhere you have an internet connection.

You can do all your bookkeeping in one place, with functions available including:

Recording invoices, bills and payments
Chasing customer payments
Pulling through your bank feed automatically to categorise income and expenses
Reconciling your bank account
Entering employee working hours
Producing financial reports
Calculating and submitting your VAT returns
Submitting quarterly updates and your end of year tax return

How online accounting supports compliance and regulatory change

Making Tax Digital

There is also increasing pressure on businesses to digitise their accounting and tax reporting given the emergence of Making Tax Digital, first for VAT and now for income tax. Making Tax Digital (MTD) is the initiative from HMRC, designed to bring the UK’s tax system into the 21st century and streamline the tax reporting system for businesses.

All VAT-registered businesses have had to file their quarterly VAT returns via MTD-compliant software since 2021 (with some businesses being within MTD even earlier than this). And since April 2026, the first self-employed and landlord taxpayers were brought into MTD for income tax, with more joining in April 2027 and 2028. MTD for income tax also imposes mandatory quarterly updates from compatible software.

Companies House

As well as HMRC’s MTD regime, there is a wider digitalisation project ongoing affecting both tax and accounts compliance. It includes HMRC and Companies House filings with both organisations gaining new powers under the Economic Crime and Corporate Transparency Act (ECCTA).

Among ECCTA’s goals is making business information in the UK more transparent and reliable. Corporation tax returns for limited companies have been filed via software only since April 2026. And from April 2028, companies will also have to file their accounts with Companies House via software, alongside higher filing burdens for micro-entities. Online accounting solutions typically have modules available to help meet these needs.

Economic uncertainty and the need for better financial visibility

With overseas conflicts, the aftermath of a global pandemic and political uncertainty all affecting the economy, UK business owners cannot rely on stability in the marketplace and need to make use of every advantage available to them. Online accounting packages provide data at your fingertips to allow you to act quickly to mitigate cashflow pinch-points or dips in sales.

The impact of digital transformation on SMBs

While large businesses may already have the tools in place to meet these new challenges, SMBs are typically more likely to need to research and invest in online accounting solutions to meet these changes. This guide helps you do just that.

Key benefits of online accounting

While making the move to online accounting solutions may become necessary due to the digitalisation of tax and accounts filing, cloud-based bookkeeping and accounting solutions also comes with a wealth of benefits beyond simply meeting mandatory obligations.

Real-time access to financial information

Traditional bookkeeping was often a retrospective task for many businesses. Cloud-based accounting makes it possible to record business transactions in real-time.

No more surprises at month-end or even year-end. You can snap receipts on the go and raise invoices before you’ve even left your client’s site. You can see how your month’s turnover is looking while watching television or check your profit margin over breakfast.

With automatic bank feeds and the ability to access data on the go this is easier than ever. Business owners get a clearer understanding of where your finances stand. You can assure yourself that you're making business decisions with up-to-date, live information.

Improved cash flow monitoring

Very few businesses have even cashflow across the year. The ability to forecast and monitor your cashflow in real time can be very valuable as you can spot any deviations from your forecasts more quickly and take action before going into the red or overtrading.

Reduced administrative workload through automation

If your accounting software is:

sending payment reminders for unpaid invoices
matching payments to customer accounts for you
using rules you created to enter key information for you to approve then that is extra time you can spend with your customers or making calls to prospects to win new contracts.

Automation helps stay on top of your finances and free up time to focus on other aspects of your business. 

Easier collaboration with accountants

Market-leading accounting solutions – TaxAssist Accountants partners with QuickBooks, Xero and for receipts, Dext – allow you to provide logins for your accountant, reducing the chance of human error compared to sharing data by printing off or emailing it across.

Multiple users can log in and use the software simultaneously. Business owners can create user profiles with different access can limit access if required. All users have their own log-in credentials and password. You can also access an audit log to see who made or changed a transaction and see when someone logged in.

Scalability as your business grows

Online accounting platforms make it easy to scale up the service you need. The software incorporates third-party apps and add-ons to develop a bespoke 24/7 accounting portal for you and your team. 

New modules can be added to the packages as and when you need them. For instance, payroll modules can be upgraded as you take on more staff or when you close in on the turnover threshold for VAT-registration request the MTD for VAT add-on.

Reducing errors and missed deadlines

Having all your bookkeeping, accounting and other business filings in one place and accessed only by whomever you provide secure logins to, reduces the chances of errors which often creep in with DIY spreadsheets or folders of hard copy receipts.

Online accounting packages keep your dashboard abreast of the deadlines relevant to you, and updates – whether IT or regulatory – are sent to you at regular intervals as part of your subscription.

Need help getting your accounts online?

Contact TaxAssist Accountants for a free, no-obligation consultation to get a fixed fee quote

01905 382 020

Or contact us

Common concerns about moving to online accounting

Cost considerations

Most packages are available for a monthly subscription fee so you shouldn’t face a big upfront cost.

There are also lots of options available to consider adding to your software. These will save you time and make business more efficient. This could be an inventory management, a receipt scanner such as Dext, a cashflow tracker or a customer relationship management (CRM) solution.

Data security

Leading software providers have high security standards, including the use of multi-factor authentication (MFA) to log-in to services. The software has built in firewalls and encryption technology. Businesses can be confident that their data is secure.

Providers automatically back-up your data. This means you won’t have to schedule regular or retain copies of these on your computer.

Learning new systems

TaxAssist Accountants can help you:

Choose the right package for you
Get you set up
Provide training at the level you need to get you off to a great start

Why professional support remains important

Online accounting replaces your old spreadsheets and paper systems – not your loyal bookkeeper or professional accountant!

Software provides data, accountants provide insight

While online accounting should make your finances quicker and easier to deal with than before, it doesn’t replace the knowledge you need to keep up with the ever-changing landscape of tax rates and rules, accounting standards, nor does it provide the advice you seek when your business hits key points in its lifecycle.

Combining technology with expert guidance

At TaxAssist Accountants, we can offer the best of both worlds with a combination of the right accounting package for you, backed up with quality, trusted advice to help your business succeed.

How TaxAssist can support you today?

Contact TaxAssist for further advice or support in using online accounting software. We can advise you on the best option for your business.. Call our friendly and experienced team today on 01905 382 020 or drop us a line using our online enquiry form.

Frequently Asked Questions

Traditional accounting software is installed on a single computer and stores data locally. Cloud accounting software is accessed via the internet and stores data securely on remote servers. The key advantages of cloud accounting for small businesses are that you can access your records from any device with an internet connection, your accountant can view your records in real time, the software updates automatically to stay HMRC-compliant and data is backed up automatically, reducing the risk of loss. Most HMRC-recognised Making Tax Digital (MTD) for income tax software is cloud-based. Cloud solutions typically offer higher security standards than desktop software, including automatic encryption and two-factor authentication.

Software subscriptions used for business purposes are generally considered an allowable business expense, which means the cost can be deducted from your taxable income, reducing your tax bill. For sole traders, allowable expenses are deducted from self-employment income before calculating income tax. For limited companies, software costs are typically deducted from the company’s profits before corporation tax. Tax rules can be complex and depend on your individual circumstances. You should speak to a qualified accountant to confirm what expenses are allowable in your specific situation.

The improvements in accounting software mean there is more automation of data-entry and categorisation of transactions, resulting in fewer mistakes and errors. While accounting software should not be completely relied upon it does reduce the impact of human error.

Reputable cloud accounting and business software providers use enterprise-level security measures to protect your data. These typically include end-to-end encryption, automatic data backups, two-factor authentication, and compliance with UK data protection (GDPR) requirements. The National Cyber Security Centre (NCSC) recommends cloud-based solutions as generally more secure than storing records on a local computer, which can be vulnerable to hardware failure, theft, or ransomware. When choosing any cloud software, check that the provider is GDPR-compliant and stores data on UK or EU-based servers. A TaxAssist Accountant can advise on reputable, HMRC-recognised software options.

Yes – and now’s the time to adopt online accounting if you haven’t already. Under the Making Tax Digital regime, all VAT registered businesses must file quarterly VAT returns through accounting software and self-employed taxpayers and landlords are currently being moved on to software-only bookkeeping and filing for income tax.

Yes. Under Making Tax Digital (MTD) for VAT quarterly returns must be filed with HMRC via a suitable software solution and under MTD for income tax quarterly updates and the end of year tax return require software filing. Online accounting packages are the ideal solution, although bridging solutions can be used to allow filing with HMRC from spreadsheet systems.

Last updated 3 Aug 2026 | First published 6 Aug 2020

This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.

Helen Wood, CA

Helen is a qualified chartered accountant (CA) and joined TaxAssist in 2025 following three years as a freelance content writer for clients in the tax and accounting publishing sector. Prior to this, She spent 17 years at Big Four and Top 10 accountancy firms. Helen writes clear and helpful articles on tax and accounting for businesses and individuals.

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