What is cloud accounting? Trying to choose the best accounting software for your business can be difficult.
One of the options available is online accounts software, also known as cloud software.
All your data is held on a remote server to which you and anyone you choose can have access. You will need to access the internet and log in to the software to access your accounts.
When I first looked into online accounting software I was very wary of someone else holding my data and ruled it out. I have now looked at it again and would choose cloud accounting over purchasing a product from the shelf.
There are still a few products that are downloaded from the internet to use remotely. The best accounting software is all cloud-based and no longer proved a desktop option. The only way to obtain them is second hand using places like eBay.
Best Cloud Accounting Software
Here is a quick rundown of the best cloud accounting software packages
- QuickBooks – Award-winning best all-around, includes additional features.
- Zoho Books – Great for small businesses, has a free version.
- FreshBooks – Great for Freelancers.
- Xero – Recommended by Bookkeepers as an excellent all-around package.
- Ember – Has accountant backup support, ideal if starting bookkeeping.
Advantages and Disadvantages of Cloud Accounting Software
Here are some of the advantages and disadvantages of running a cloud over a desktop accounting run on your computer.
Please have a look at our most popular cloud accounting reviews. Most of these companies offer a free trial period, so you have the opportunity to try before you commit.
What is Cloud Accounitng? Benefits
There are many benefits of using cloud accounting software; these are a few of the main ones:
Access Accounts from Anywhere
One of the main features of online accounting software is accessing it from anywhere, 24/7, with an internet connection. It is beneficial now with more employees and business owners working from remote locations.
The best accounting software for small businesses provides an app for a mobile device through Android and ios. The features that might be included in apps are:
- Banking and connect to bank feeds
- Reporting of financial information-Time Information
- Mileage tracking
- Expense tracking
- An overview of the income and expenses
- Raise invoices on the go and email them to the customer
Some mobile apps have the same features as the online accounting software, meaning they can complete all the tasks.
A significant advantage is that several employees can work on the accounts simultaneously and update them in real-time.
Also, keeping financial data up-to-date makes information available for the bank position, profits, and even cash flow.
Making Tax Digital
HMRC in the United Kingdom is introducing Making Tax Digital for business.
Making Tax Digital is the move to get digital records and submitting them via software.
MTD for VAT started in 2019 for businesses registered for VAT with a turnover of more than £85,000.
The next stage is to introduce it to small companies and self-assessment tax returns; an excellent online accounting system will do everything for you.
Most providers allow more than one user. Depending on the plan subscribed to will depend on the number of users that you can invite.
Nearly all allow you to invite a bookkeeper or accountant. It is beneficial at year-end and producing the company accounts. You can still carry on with the work while they are making any changes for the previous year.
As a bookkeeper, I sometimes receive questions on how to complete a task. I can log in to their software and explain step by step what they need to do.
Low start-up costs
Although most provides have an online monthly subscription, some are entirely free, while others start from £5 per month. The subscription will automatically renew each month or year.
Most offer a free trial, so you can see if it is suitable for your use.
With a traditional package, the cost could start in the hundreds of pounds.
Cancel at Anytime
As with most business cloud systems, you can cancel at any time.
There might be several reasons for cancellation, like changing software or the business has ceased trading.
Once the subscription is cancelled, you might have access to the data or the data removed from the system.
Cloud Accounting Software Updates
One of the significant advantages is that you will know the software will always be up to date.
Most business cloud providers are constantly updating the software either for improvements or for rules like making tax digital. You will know that every time a user logs in, they are using the most up to date software.
Cloud-based providers have different online support. Some will offer online chat, while others have email or telephone.
A few of the newer providers, like Ember, even offer online accountant support. It is ideal for a small business needing help with both its accounting and software.
Reduce Accountants or Bookkeepers Fees
By keeping the financial data up to date, you may reduce the fees of a bookkeeper or accountant.
Completing your accountants will help you to understand the figures, keep on top of the cash flow and financial reports.
Keep Track of Customers
Most services allow you to invoice customers from any device, enabling customers to get invoices quicker and hopefully pay them fast.
They also keep track of customers debts and can send out reminders if set.
Do you want to try and reduce paperwork? Most accounting packages include features to email pdf’s jpeg and other receipts directly to the account.
There are even addons to scan or photo the receipt, and the software will extract the information and provide it as accounting data. A couple of suggestions are Dext and AutoEntry.
Upgrade the Software as Business Grows
One advantage of cloud accounting software is that you can upgrade the package if the business grows or changes.
When choosing the accounting software, check out the pricing plans and look for any features you might need. It might include stock management, payroll for new staff, project tracking or several users.
Most of the cloud accounting for small business includes online guides, help and videos.
If you are looking for something, they usually include a question mark that you can press to get further information. Some also have links to guides on the page.
Easily Integrate with other Solutions
Zoho Books has an additional 40 different solutions for small businesses that integrate into the accounting software.
Xero has lots of partners that have built additional apps for extra services.
Set up User Roles
If you are worried about other staff seeing the accounts, you can set the primary user as an admin and restrict the other users for different tasks.
An example might include setting just the sales ledger so that they can raise sales invoices.
What is Cloud Accounting – Disadvantages
Monthly fee Might get Expensive
Although the monthly subscription might start cheap, if you need to add on additional features or invite new users, they can soon get expensive.
Sharing Information to the Wrong People
If, as a small business, you invite lots of users to log in, if you have not set the user controls, you might share the wrong information with people.
It is always best to restrict access where you can.
Wanting to Keep Records in House
More significant business can include a developer team and their servers. It allows them to keep all their information within the company.
Even some smaller businesses prefer not to use cloud accounting for their records and use a desktop option.
Good Internet Access is Required
One problem some people face is slow internet access. If you have slow access, it might take a long time to complete the accounts.
If this is the case, it is worth looking at some of the traditional options for the desktop versions.
What is Cloud Accounting? – Choosing the right package
There are so many different options for online accounting software that finding the right one may be a minefield. Start by looking at what each one has to offer and the prices. Most have a free trial, so it is worth looking in detail at how they work and how easy they are.
To help use our free accounting software comparison tool. It list all the top software and you can compare the features and prices of each one.
If you are still not sure to speak to other people, including accountants and business owners.
Check out our guide on the best accounting software for small business. It includes the best free and paid options.
Here are a few options available.
Conclusion to What is Cloud Accounting?
Cloud accounting for small businesses is when your accounts are held remotely by a third party.
There are many benefits of cloud accounting, including real-time data, online support, bank feeds, mobile app, payroll, MTD for VAT and ITSA and sharing data.
Return from what is cloud accounting? To the business accounting basics page.