Accounting software is designed to make bookkeeping and tax filing easier for small business owners. For those using such programs, properly designed accounting software will help you save time and money, keep your financial information safe and secure and overall, make your life easier.

The advent of “the cloud” and cloud computing technologies has provided new ways to make small business accounting software more streamlined, easier to use and better equipped to perform its accounting tasks. So, what is cloud-based accounting and how does it help small businesses?

What is Cloud-Based Accounting?

To understand what cloud-based accounting is, you need to have a rudimentary understanding of what “the cloud” is and how it works. The cloud refers to a set of servers and data banks that are connected via the internet, which is accessible from anywhere in the world, 24/7.

Cloud-based accounting programs are offered as software as a service (SAAS) and are hosted on these servers and data banks, which eliminates the need to download and install small business accounting software on a personal computer or laptop.

How Does Cloud-Based Accounting Work?

Cloud-based accounting software, like all SAAS offerings, is subscription-based and provides easy access to all users via an internet connection. Once these users are subscribed, they can access their accounts via several avenues, including desktop and laptop computers, and specially designed apps for mobile devices.

These software programs are also able to be connected directly to your business accounts through your bank, showing real-time data about the movements of your business income and expenses. By having this direct connection from your bank to your books, the time-consuming data entry required to keep your books up to date is greatly reduced.

Is Sharing Financial Data Over an Internet Connection Safe?

One of the most common (and understandable) questions small business owners have about cloud-based accounting software is about data security and the safety of your financial information. After all, is your web browser safe enough to trust all their business’s financial information? Absolutely, it is!

Just like banking services and other financial apps, cloud-based accounting software is encrypted, making it inaccessible to anyone other than the authorised and registered user. When compared to other types of traditional accounting software, cloud-based accounting offers a higher level of data protection than comparable models that store information only on a hard drive.

Traditional Accounting Software vs. Cloud-Based Accounting Software

Traditional accounting software has served many business owners well over the years and the idea of change can be daunting, particularly when it comes to your financial information and business books. And while traditional forms of business accounting software have their benefits, when you stack them against cloud-based programs, some obvious differences make themselves known.

Challenges with Traditional Accounting Software

  • Security Concerns

Traditional accounting software is installed and kept on one computer along with all the information regarding your business. That means if something happens to that device, or to the information you transfer to a USB, it can be lost forever and accessed by whoever opens that device. Data security is almost non-existent in some of these traditional programs.

  • Out-of-Date Software

Traditional accounting software needs to be updated manually by the user and these updates are typically done only once or twice a year. For those using these programs, they could be losing time and money by using out-dated and ineffective software, simply because it wasn’t updated.

  • No Automatic Back-Ups

This is particularly important with financial information. Traditional accounting programs do not automatically back up, leaving the fate of your financial information to the device it is on. If that device is dropped, broken, or lost, all your business information goes with it.

  • No Integration with Banking Information

No one is a fan of data entry. Traditional accounting software does not connect to any type of banking software, which means that all the transactions from your business accounts (and any other related expenditures and payments) must be recorded manually into your books. Particularly in the automated and digital age, this type of manual entry becomes less and less appealing.

How Can Small Businesses Accounting Benefit from Cloud Technology?

Understanding the differences between traditional and cloud-based software and how cloud-based accounting works is important but the real question on the mind of most business owners is: “How does this type of accounting service benefit and help me?”

  • Most Up-to-Date Software Versions

Automatic software updates, which are an integrated part of almost all cloud-based software programs, ensure that business owners are utilising the most effective and up-to-date software available. These updates can provide insights into business spending, make suggestions and much more, depending on the program you are using.

  • 24/7 Access to Accounting from Anywhere in the World

The global market and the interconnectedness of today’s world makes instant access, regardless of your physical location, a must for many people. The ability to connect to your books anywhere, anytime (as long as you have an internet connection) helps open up the world to business owners and make keeping accurate records simple and easy.

  • Secure Online Account Access

Online account access for many of these accounting programs is as secure as the banking apps you use every day. They are encrypted and protected against malicious actors, keeping your records safe and secure.

  • Real-Time Banking Information

Connecting to your banking information in real-time reduces the amount of time and effort because the number of data entries necessary to keep your books accurate and up to date drops dramatically.

  • Accounting Apps

Cloud-based accounting programs have apps that are connected to your books, making checking and updating them on the go simple and easy. These apps are always evolving and growing, making the bookkeeping side of your business less and less tedious.

  • Lower Cost of Ownership

A subscription-based service, with all its extra features and capabilities, often has a lower cost of ownership than a stand-alone, traditional software program. Not only does it save you money but also decreases the time you spend (and the headache you get) when doing your books.

  • Data Entry Backups

Automatic back ups to the cloud protect your information in the event of some mishap with your physical devices. These back-ups are held in multiple different servers, ensuring safe and easy access to your information.

Cloud-Based Accounting for Small Business Owners

Small business owners have enough on their to-do lists without having to worry about their accounting software and books. Cloud-based accounting provides better options with more flexibility, giving business owners the tools they need, while at the same time providing more secure and adaptable programs to help them grow.

If you need help switching and managing cloud based accounting packages, get in touch now. Call us on 020 7419 6538 or visit our contact us page.