Cloud accounting has failed sole traders – here’s why
Cloud accounting came on the scene promising to make bookkeeping and business management simple, easy, and efficient, but a huge swathe of traders have been effectively left behind. With MTD ITSA looming, accountants and bookkeepers who work with sole traders and landlords have to work out how to serve their needs while still keeping their own workflows on track and margins on point.
Your choice of sole trader accounting software could make the difference between MTD ITSA being an exciting growth opportunity or an endless headache.
Why most cloud accounting tools don’t work for sole traders
It’s worth saying, first of all, that for many businesses and their accountants, cloud accounting tools have been—and continue to be—a huge benefit. Accountants and bookkeepers are now able to serve their limited company clients from anywhere, with more accurate information and convenient, app-based tools.
The issue is that sole traders are different: they have their own needs and challenges, and the majority of tools available on the cloud accounting market were made with someone else in mind.
This leads to issues, such as:
Cloud accounting tools are too complex
Cloud accounting tools were designed with small to medium businesses in mind, based on their needs and those of their accountants. For the majority of sole traders, they’re too complex to use, weighed down with features that don’t add any measurable value for them.
Meanwhile, they can also lack features that sole traders actually need. For example, 75% of self-employed clients use personal bank accounts to run their business, making their financial incoming data complex and messy—but bank feeds in most cloud software don’t help separate the transactions.
Costs are too high
The upshot of this is that sole traders are asked to pay for superfluous features and tools that they don’t even need. What’s more, sole traders are the most cost-sensitive clients, and upwards of £12 a month is just too much for most to justify.
This also applies to the fees they pay their advisors. Accountants, therefore, need their sole traders to do as much bookkeeping themselves as possible, to enable them to process sole trader work at scale and maintain their margins.
Any solution designed for a sole trader has to be simple and easy to use, at the right price point.
The onboarding (and troubleshooting) takes too long
Implementing cloud accounting can require extensive client training, meaning accountants and bookkeepers then have to become front-line support for their customers’ questions. For anyone looking to scale their practice and acquire more clients, this can be a major blocker to growth.
With MTD ITSA on the horizon, now is a prime time to be growing your sole trader client-base, but that means using a solution that works with them, not losing hours to fielding questions and bookkeeping queries.
Cloud accounting is out of date
Cloud accounting is now 16 years old—designed for a business environment that has been and gone.
Updates such as MTD ITSA have been integrated into software packages, along with years of new functionality and well-publicised acquisitions, all designed to improve the accounting experience. In reality, it’s led to a market full of feature-rich, beautiful software that has missed out over half of the business population.
The trouble is that it can be harder to make a simpler product that does the things that matter well, and de-featuring an existing platform can be time-consuming, expensive, and risky, especially for a market that most didn’t consider in the first place.
Choosing the right solution for your business and your clients
So what's to be done? Is it back to Excel sheets and paper receipts?
We’re not saying it’s time to throw the cloud accounting baby out with the bathwater, but it is time that sole traders got a solution that works for them.
Coconut is accounting and tax software that’s built specifically for sole traders and their accountants. There are no unnecessary features, no extra costs, and no confusing interfaces. We offer a simple, intuitive mobile app for sole trader clients, and a straightforward web portal for accountants and bookkeepers, which gives you real-time access to all of your clients’ accounting information, whenever you need it.
As an accountant, you can sign up for a Coconut Partner Account for free, explore the Coconut Portal at your leisure, and see for yourself just how easy Coconut will make working with your sole trader clients
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