Cloud Accounting for Small Business / Keeping your books at an offsite server may make your accounting function more efficient and cheaper.

LL Brougham writes: What Is Cloud Accounting?

Cloud accounting represents a shift from the traditional “software-in-a-box” installed on your desktop or laptop that can be updated only by accessing that specific machine. Instead, cloud accounting is sold as “software-as-a-service”; the application is web-based and generally accessible at any time from any location because your data and the application itself reside on the remote server.

Cloud accounting offers myriad features, including accounting, invoicing, payroll and expense tracking. Several service providers now offer online accounting solutions tailored to the unique needs of individual businesses. In general, cloud products are easy to use and usually inexpensive or even free.

Advantages of an Online Service

Cloud accounting offers several time-saving advantages over device-bound systems:

• ·         Integration with financial accounts: Some programs save you the pain of exporting and importing spreadsheets by offering the ability to import transactional data from your bank automatically.
• ·         Online invoicing: Many offerings allow you to create invoices quickly and easily, then send them electronically via email to your clients. Clients can then pay your invoice online. The invoice is automatically marked as paid once the payment is processed.
• ·         Expense tracking: In addition to the traditional method of manually entering line items to a budget or expense account, some providers allow you to capture and file receipts or bills by simply taking a picture from your smartphone or mobile device. The picture is read and the data entered automatically into a pre-defined category within your account.
• ·         Cross platform: Since this is a web-based service, you can use a Mac, PC, Linux, or a combination of multiple platforms.
• ·         Mobile friendly: Many cloud accounting platforms offer mobile apps that provide access to key features from your smartphone or tablet, such as submitting a receipt directly following a business lunch, or quickly creating an invoice while you’re on the go. For example, you could snap a photo of the receipt from your business lunch and send it directly to your accounting department. No more piles of unprocessed paper receipts in your drawer!
• ·         Collaboration: Some programs offer the ability to collaborate on financials with multiple employees and even to share your books with an off-premises accountant or bookkeeper.
• ·         Security: We all know that we should back up our data regularly, but most of us don’t. If your desktop crashed or your laptop got stolen and you had not backed up your data, it would all be lost. Cloud accounting companies use rigorous back-up practices to ensure your data is protected against possible deletion or corruption.

Cloud accounting can save you time and money.

Lower Your Costs

Switching to cloud accounting can save you time and money. For example, using electronic invoices may help you to get paid faster, particularly if payments are made online.

The pricing model of cloud accounting is subscription-based. Depending on the provider and the services you require, the monthly cost ranges from under $20 to about $40. Some providers offer different tiers based on the number of clients, number of transactions, number of staff that requires access, and other product-specific features. Technical support is included with the subscription rather than treated as an add-on.

Some providers offer a free tier as a trial or for very small businesses. However, at least one company, Wave Accounting, offers service for free, while supporting itself with advertising revenues and by charging fees for processing electronic invoice payments and payroll transactions.

By comparison, some of the leading software-in-a-box options start at under $100, but can cost nearly $600 for a more comprehensive edition with a 12-month payroll service subscription. Gaining access to new features may require you to purchase an upgrade or new edition. Cloud accounting, on the other hand, automatically adds new features as they become available.

Other Considerations

Every rose, after all, still has its thorns. So, before you get rid of your current desktop-based software, some potential drawbacks to cloud accounting should be considered.

With the application and your data located remotely (and, therefore, not within your control), there’s always the possibility that something could disrupt access to your service. That “something” could be anything from a server issue at your cloud accounting provider, to your local Internet connection going down, to a power outage across town. Unfortunately, these things can happen.

Another consideration to make before committing to a cloud accounting option is where your data will actually be stored. With some of the current options available, your data could be stored on servers outside Canada. If so, your data may be subject to the laws of the country in which it is stored. If this affects your business, check with the provider in advance.

What about My Accountant?

Some critics have commented that cloud accounting may eliminate the need for accountants. This is highly unlikely. Most owner-managers will find that cloud accounting is no replacement for a thinking human to oversee their financial decisions.

In fact, cloud accounting may make keeping in touch with an accountant even easier. With online collaboration, instant uploading of bills, receipts and invoices, and the ability to designate or authorize a “user” to access your account data, you may find that your regular visits to your accountant become a breezy experience!

Most cloud accounting services also offer a “network” feature to encourage accountants and bookkeepers to register with them. The service provides incentives that include a listing on the service provider’s website to help attract prospective clients. This feature gives you an easily accessible network of accountants who are already familiar with the format and organization of your type of financial data. Assistance is available by simply logging on and clicking a few links.

Final Words

While cloud accounting may be a relatively new kid on the block when it comes to accounting software, there are some compelling advantages:

1. 1.      many offerings are designed to be easy to use (one was even created by and for “people who hate accounting”);
2. 2.      online integration with bank accounts and the ability to manage financials on the go could potentially be big time savers; and
3. 3.      remote storage of data means easy accessibility anytime, anywhere, and protection against potential data loss.

So, is cloud accounting right for your small business? It might be worth looking into.