Why Small Businesses Should Switch To Cloud Accounting Software

Are you a small business owner struggling to keep up with your bookkeeping? If so, it may be time for you to take advantage of the many benefits that switching to cloud accounting software can provide. Cloud accounting is an efficient and cost-effective way for businesses of any size to manage finances without needing expensive hardware or dedicated IT staff.

By leveraging cloud technology, companies can access real-time financial data in a secure online location, streamline tasks such as invoicing, payroll processing and tax filing, and enjoy additional features like automatic client payment reminders and expense tracking. Read on to find out more about why small business owners should make the switch to cloud accounting software today!

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What Is Cloud Accounting Software?

Accounting software that is hosted in the cloud functions in a manner that is analogous to the Software as a Service (SaaS) business model. Cloud accounting software is analogous to conventional accounting software installed on the company's premises or by the users themselves. The information is transferred onto a remote location known as "the cloud," where it is processed and delivered to the customer.

What’s The Difference Between Cloud Accounting And Traditional Accounting Software?

Cloud accounting stands in stark contrast to more conventional, on-premises bookkeeping in a number of important respects. One benefit of using cloud accounting is that it offers greater flexibility. Instead of being restricted to a small number of devices located on the premises, accounting information may now be viewed remotely on any device equipped with internet access.

Second, in contrast to traditional accounting software, cloud accounting software automatically updates your firm's financial data and gives real-time reporting on your company's finances.

Because of this, account balances will always be accurate, and the number of errors caused by manually entering data will be reduced. They are also better equipped to handle transactions involving many currencies and multiple companies in a more effective manner.

In the realm of on-premises computing, the expenses of acquiring and maintaining software licences, acquiring new licences and paying new fees for database, systems management, and other software increase if a company's size increases. Additionally, it is possible that the company will have to undertake pricey capital acquisitions of new gear, such as servers.

However, when companies use cloud services, they don't have to worry about being trapped with expensive, permanent gear and licences when their contracts expire. In addition, there are no significant cost increases even when the organisation has just moderate growth.

In addition to this, traditional bookkeeping is much more labour-intensive to maintain than cloud accounting. The cloud provider's responsibility is to carry out backups and automatic updates and installations to ensure that nothing needs to be downloaded or installed on a work computer.

Reasons Why Cloud Accounting Software Is Essential For Your Business

1. Accessibility

Data may be transferred to the cloud in a safe manner in today's world, and contemporary accounting software is jam-packed with cloud-based capabilities for your ease. As a result, you can access books and sheets no matter where you are or when you require them.

These accounting applications may be downloaded and installed on a variety of smart devices, giving you and your accountant the ability to verify figures from virtually any location. One of the most important aspects of cloud-based accounting software is its availability.

2. Saves You Time

According to a well-known proverb, "Time is gold. Do not waste it." In the past, accountants would physically complete their books and reports, which required a significant investment of time and resources. Nowadays, accountants are capable of effectively completing their financial reports with the assistance of cloud accounting software.

By streamlining the accounting process, you allow your accountant more time to focus on providing company advising services and completing other crucial responsibilities. The more time you save, the more cash you will save, which will improve your bottom line.

3. Enhances Decision-Making

You can utilise cloud accounting software as pressure to improve your personal decision-making procedure and make better decisions, which is one of the major foundations of a successful company enterprise. Using uncomplicated charts and graphs, both you and your accountant will be able to keep track of company performance measures.

Being able to access information in real time makes it much simpler for you to comprehend these numbers, which in turn makes it much simpler for you to map the success of your enterprise. Utilising accounting software to improve your personal decision-making can provide a number of benefits, including but not limited to the reduction of risks, assistance in creating better company plans, and the identification of viable solutions to these problems.

Benefits of Cloud Accounting

The migration of accounting functions from local desktop computers to remote servers in the cloud has been hailed as a significant step forward in financial administration. As a result, a number of the disadvantages and costs associated with conventional accounting methods have been eliminated. But what particular benefits can cloud accounting provide your business?

The following is an outline of the primary areas in which a cloud-based accounting system contributes actual, concrete value.

1. Access your accounts anywhere

Accounting in the cloud eliminates the requirement that employees operate from a single computer in a central office by giving them access to their most important company statistics around the clock and anywhere with internet connectivity.

You can view your accounts by logging in through a web browser on your desktop computer, or you can use the smartphone application provided by your internet service provider on your phone or tablet.

2. Access to real-time information

Real-time reporting is something that can be accomplished if you make sure that your bookkeeping and bank reconciliation are always up to date. You do not need to look at previous reports that are several days, weeks, or even months out of time because you have rapid access to a summary of the current financial performance of the business.

When looking at your capital base, considering future expenditures, and making major financial and strategic choices as a management team, having this real-time insight is essential.

3. Access to the app ecosystem

Open application programming interfaces allow you to extend the functionality of your primary business system by adding a variety of apps and tools developed by third parties.

So, for example, there is an app for estimating cash flow, there is an app for online invoicing, there are tools for managing projects that are specialised to the business, and there are a whole host of other workable solutions.

These technologies provide you with the ability to save even more time, cut down the expenses of resourcing, find an issue farther in advance, and, in general, lessen the burden of the unneeded administration that is stifling your productivity.

4. Live bank feeds

You have the option to connect your banking activities straight with your accounting if you use one of the various cloud accounting programs that provide live feeds to your bank accounts. With a live feed, you won't need to key in every line of your bank statement by hand, nor will you need to submit a CSV file that you've obtained from your online banking portal.

Rather, your bank information will be pulled through into your accounts immediately. This will speed up reconciling your bank accounts and offer you a more precise snapshot of the balance in each account.

5. Always working with the latest software version

You will always use the most recent version of the program whenever you log in to your cloud-based accounting platform. You simply have to log in and get to work; there is no requirement to perform updates, which can be time-consuming and expensive. In addition to this, you won't need to worry about applying any necessary security patches because your software supplier will take care of that for you immediately.

6. Secure sharing of data

With a cloud accounting system, you can allow your accounts to be viewed when you are collaborating with your accountant, bank, or other consultants. This makes it easier to collaborate. In addition, there is no requirement to use USB memory devices or communicate with one another via email.

Your advisors can view all of your financial data at any given time and do so in a way that is both safe and protected. This is a more expedient and secure method, and it provides your advisors with the data they need to help and counsel you moving ahead.

7. Connected online payment

Payment apps such as GoCardless can be linked to your online accounting and invoices to enable clients to pay you instantly, thereby shortening the amount of time it takes for clients to make payments and decreasing the amount of administrative work that either you or your employees have to do.

Cloud Accounting: Is My Financial Data Secure?

Traditional accounting software provides a safe manner of keeping financial data. Still, cloud accounting services offer a way that is at least as safe, and in certain cases much more protected, than the conventional accounting software.

For example, a computer or laptop belonging to the business containing sensitive financial data could be misplaced or stolen, resulting in a breach of personal data. On the other hand, cloud accounting does not leave any financial data traces on corporate computers. Furthermore, access to the information stored in the cloud is secured and guarded with a password.

When information is shared, there is also less cause for concern. With cloud accounting, all that is required to give two people access to the same data is to have their own individual passwords. In addition, the transfer of information by traditional means frequently requires flash drives, which are susceptible to being misplaced or stolen.

Last but not least, cloud service providers typically have backup servers in many data centres. Even if one of the server networks fails, you will still have access to the information you need. In a fire or other natural disaster, data stored locally only runs the risk of being lost forever and might even be damaged beyond repair.

Will Cloud Accounting Save Me Money?

When it comes to storing data, businesses that utilise cloud accounting need a smaller initial server infrastructure, and they don't need to hire additional IT professionals to manage or upgrade the cloud accounting system.

Companies will be able to save more money if they reduce their operational costs and do not buy any new software. However, in the realm of on-premises businesses, the situation is exactly the reverse.

When a company expands, it typically must deal with increased costs associated with software licences and maintenance, in addition to the acquisition of new licences and charges for database, management capabilities, and other software.

Best Small Business Accounting Software

1. Xero

If you own a company and find yourself always on the move, Xero could be the accounting solution you've been looking for all along.

Xero is a sophisticated accounting software program focusing on simplicity of use and mobile usefulness. It is designed to meet the needs of smaller companies. Xero allows for synchronisation across various devices and provides users with real-time updates. This gives business owners access to the most recent information regardless of where they are.

The product's user interface is simple and straightforward, and it can handle a wide variety of accounting tasks. Some of these tasks include payroll processing (via integration with Gusto), monitoring of expenses, billing and invoicing, and the quantification of sales tax, along with other functionalities.

Pros

• Infinite users are included in all of the programs.
• Included in each and every plan tier is Hubdoc (automatic capture of receipts and bills)
• Have the ability to control fixed assets
• Accurate monitoring of the project

Cons

• There is a possibility of delays in the processing of payments for PayPal transactions.
• There are no automatic reminders sent out for invoices that remain unpaid.
• No phone assistance

2. QuickBooks Online

QuickBooks Online, which is offered by Intuit, is a well-known accounting program that can assist business managers in efficiently managing their accounting responsibilities.

QuickBooks Online includes all of the features that are necessary for proprietors of small businesses to take control of their bookkeeping. Because of its clear and uncluttered user interface as well as its straightforward reporting, even novices may rapidly get up to speed with the software. Tracking of travel, income, and expenses, as well as sales and tax reporting as well as features to manage contractors, are all included in all plans offered by QuickBooks Online.

Other options offered by QuickBooks Online include access to extra features and capabilities, like stock management, assistance for up to 25 specific customers, and even connection to a customer service manager committed to the company.

Pros

• Stock administration is included with the Plus and Advanced versions of QuickBooks Online.
• Reports using the double-entry method of accounting
• Integration of third-party applications
• Many QuickBooks Online guides, specialists, and other online resources are available.

Cons

• The monthly subscriptions are more expensive compared to other choices for accounting software.
• There is a maximum number of users that can be assigned to every subscription.
• There is a learning curve associated with advanced functions.

3. FreshBooks

FreshBooks is currently one of the most well-known and widely used accounting systems that are designed specifically for small businesses.

The accounting software offered by FreshBooks is equipped with clever technologies and back-office automation that work together to minimise the need for manual information entry and make bookkeeping simple.

For example, FreshBooks has the capability to import financial information from a variety of suppliers instantly and can be programmed to reconcile credit and debit amount balances immediately.

The following significant financial statements are readily available to users:

• Balance sheet
• Income statements
• Cash flow statements

Individual users also have the ability to modify access rights for themselves. For instance, workers can be given restricted access to financial reports, whilst accountants can be allowed enhanced administrator powers to manage the company's finances better.

Pros

• Support for clients who have received high marks
• Time-tracking and mileage-tracking capabilities are built into each and every plan.
• Extensive inventory of cloud-based accounting functions

Cons

• A relatively small number of customers and consumers
• The most basic plans do not provide access to an accountant or a bank reconciliation tool.
• No tax projections for the quarter

4. Zoho Books

Zoho Books is an online accounting software that enables users to control their accounts payable, accounts receivable, and stock.

The billing programme is lightning quick, and the accompanying bookkeeping software provides a significant number of functions at an affordable cost. As a result, Zoho Books is an excellent substitute for more costly choices such as QuickBooks Online, and it is still capable of satisfying all of your company's requirements.

Pros

• The vast majority of accounting responsibilities can be handled through the smartphone application.
• A free variant of the software that is surprisingly capable
• The price is significantly lower than that of competing accounting software.
• The premium package includes support for many currencies.

Cons

• Advanced capabilities, such as project monitoring and process automation, require payment in order to be used.
• There is no capability to monitor fixed assets such as real estate, land, or equipment.
• There is a cap on the total number of users for each tier.

5. Sage 50cloud

Sage 50cloud Accounting is an all-inclusive, cloud-based accounting software for smaller companies that comes with a wide variety of personalisation possibilities and a number of other cutting-edge functions.

The Pro Accounting plan offered by Sage 50cloud is designed to meet the needs of smaller, independently owned businesses. It is the most affordable option. It is capable of handling various accounting duties, including the administration of expenses, the creation of invoices, and the monitoring of inventories. Additionally, Sage 50cloud Accounting interfaces without any difficulty with Microsoft Office.

Sage's other packages offer extra advanced capabilities, like role-based security rights and account administration for several firms; nevertheless, these packages are unaffordable for smaller organisations with more limited budgets.

Pros

• Lots of different choices for personalisation to suit your requirements.
• Instruments for managing and keeping tabs on the stock
• The integration of Microsoft 365

Cons

• No mobile app
• Clunky user experience
• There is no choice for any of the plans that include time tracking.

Bottom Line

Cloud accounting has evolved as an approach to the management of a company's financial information that is both cost-effective and secure. Technology is always advancing, and it is anticipated that it will develop in a manner that is significantly more trustworthy and effective. Therefore, make it a priority to discuss transitioning your company to cloud accounting with your accountant as soon as possible.

Content Summary

• Are you a small business owner struggling to keep up with your bookkeeping?
• If so, it may be time for you to take advantage of the many benefits that switching to cloud accounting software can provide.
• Cloud accounting is an efficient and cost-effective way for businesses of any size to manage finances without needing expensive hardware or dedicated IT staff.
• By leveraging cloud technology, companies can access real-time financial data in a secure online location, streamline tasks such as invoicing, payroll processing and tax filing, and enjoy additional features like automatic client payment reminders and expense tracking.
• Accounting software that is hosted in the cloud functions in a manner that is analogous to the Software as a Service (SaaS) business model.
• Cloud accounting software is analogous to conventional accounting software installed on the company's premises or by the users themselves.
• Cloud accounting stands in stark contrast to more conventional, on-premises bookkeeping in a number of important respects.
• One benefit of using cloud accounting is that it offers greater flexibility.
• Second, in contrast to traditional accounting software, cloud accounting software automatically updates your firm's financial data and gives real-time reporting on your company's finances.
• In addition to this, traditional bookkeeping is much more labour-intensive to maintain than cloud accounting.
• Data may be transferred to the cloud in a safe manner in today's world, and contemporary accounting software is jam-packed with cloud-based capabilities for your ease.
• One of the most important aspects of cloud-based accounting software is its availability.
• By streamlining the accounting process, you allow your accountant more time to focus on providing company advising services and completing other crucial responsibilities.
• You can utilise cloud accounting software as pressure to improve your personal decision-making procedure and make better decisions, which is one of the major foundations of a successful company enterprise.
• Utilising accounting software to improve your personal decision-making can provide a number of benefits, including but not limited to the reduction of risks, assistance in creating better company plans, and the identification of viable solutions to these problems.
• The migration of accounting functions from local desktop computers to remote servers in the cloud has been hailed as a significant step forward in financial administration.
• Accounting in the cloud eliminates the requirement that employees operate from a single computer in a central office by giving them access to their most important company statistics around the clock and anywhere with internet connectivity.
• Real-time reporting is something that can be accomplished if you make sure that your bookkeeping and bank reconciliation are always up to date.
• Open application programming interfaces allow you to extend the functionality of your primary business system by adding a variety of apps and tools developed by third parties.
• You have the option to connect your banking activities straight with your accounting if you use one of the various cloud accounting programs that provide live feeds to your bank accounts.
• Rather, your bank information will be pulled through into your accounts immediately.
• You will always use the most recent version of the program whenever you log in to your cloud-based accounting platform.
• With a cloud accounting system, you can allow your accounts to be viewed when you are collaborating with your accountant, bank, or other consultants.
• Your advisors can view all of your financial data at any given time and do so in a way that is both safe and protected.
• Traditional accounting software provides a safe manner of keeping financial data.
• Furthermore, access to the information stored in the cloud is secured and guarded with a password.
• When it comes to storing data, businesses that utilise cloud accounting need a smaller initial server infrastructure, and they don't need to hire additional IT professionals to manage or upgrade the cloud accounting system.
• If you own a company and find yourself always on the move, Xero could be the accounting solution you've been looking for all along.
• Xero is a sophisticated accounting software program focusing on simplicity of use and mobile usefulness.
• Infinite users are included in all of the programs.
• QuickBooks Online, which is offered by Intuit, is a well-known accounting program that can assist business managers in efficiently managing their accounting responsibilities.
• QuickBooks Online includes all of the features that are necessary for proprietors of small businesses to take control of their bookkeeping.
• Tracking of travel, income, and expenses, as well as sales and tax reporting as well as features to manage contractors, are all included in all plans offered by QuickBooks Online.
• ProsStock administration is included with the Plus and Advanced versions of QuickBooks Online.
• The monthly subscriptions are more expensive compared to other choices for accounting software.
• FreshBooks is currently one of the most well-known and widely used accounting systems that are designed specifically for small businesses.
• The accounting software offered by FreshBooks is equipped with clever technologies and back-office automation that work together to minimise the need for manual information entry and make bookkeeping simple.
• Zoho Books is an online accounting software that enables users to control their accounts payable, accounts receivable, and stock.
• Sage 50cloud Accounting is an all-inclusive, cloud-based accounting software for smaller companies that comes with a wide variety of personalisation possibilities and a number of other cutting-edge functions.
• The Pro Accounting plan offered by Sage 50cloud is designed to meet the needs of smaller, independently owned businesses.
• Additionally, Sage 50cloud Accounting interfaces without any difficulty with Microsoft Office.
• Cloud accounting has evolved as an approach to the management of a company's financial information that is both cost-effective and secure.