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Is Accounting Software Secure?


Small business owners often have questions about the security of the software they use. However, the concerns often boil down to just one question: Is confidential and mission-critical accounting data safe from prying eyes and dangerous activity? The short answer is yes. When it comes to security, accounting software uses a variety of methods for keeping sensitive financial data secure.

Gaining a clear understanding of the security measures available for accounting software may help small business owners better understand the factors to consider when choosing a service provider.

Location and Personnel-Based Security

If accounting is offered as a service (SaaS), data may be stored on offsite servers. This means that workplace security measures are required to protect confidential information—both in the workplace of the client, as well as the storage facility and offices of the service provider. Measures to limit data loss may include limited access to authorized site personnel, and implementing authorization standards including password protection for accessing servers and areas within a storage facility.

Another important factor to consider is the behavior of staff involved with the input, storing, and access of data. Employees of the software provider should take part in information security training to learn the protocols required when dealing with confidential financial data. In addition, staff members of the accounting client should also be trained in the safe handling of sensitive accounting data online. This includes learning the signs of potential online security dangers, how to select and store passwords, and safe logout practices.

Security Against Natural Disasters

An often overlooked security precaution is protection against floods, fire, tornadoes, hurricanes, and super storms. If a business stores accounting information on its premises, and backs up the data through a local area provider with nearby servers, a region-wide natural disaster may wipe out both the business' copies as well as the backup—the worst-case data loss scenario. The solution? Choose an accounting software service provider with server locations outside of a business' local region.

Encryption for Data Transfer

To help prevent access to accounting information from external parties, a process known as encryption is used. As data enters networks, the Internet, and/or the cloud, it is coded or encrypted so that it appears unreadable to all except the authorized recipients. These individuals can access the data using an assigned encryption key. This prevents data hackers from reading the information as it's transmitted, and helps prevent exposure to viruses and malware (malicious software) which may infect a software system and corrupt data.


Security breaches often occur as the result of unauthorized internal (and external) access. One way to limit access to accounting information is via authentication. These measures are set in place to confirm that a user has the authority to view and/or transact on an account.

Anyone who has chosen a password for an email account or an online banking account has taken part in authentication; especially if they've chosen one or more security questions to appear should the first password entries be incorrect. Authentication for optimal security is just one way accounting software is superior to traditional accounting methods. After all, anyone with access to a filing cabinet may view paper-based files.

The robust authentication processes of an accounting software provider may include requirements such as choosing unique passwords with combinations of capital and small letters, symbols, and numbers, as well as changing the passwords periodically. This helps protect against cyber security threats because it becomes more difficult for hackers to figure out a password and access the system.

Regulatory and/or Government Requirements

When choosing an accounting SaaS provider, business owners should ask a couple of key questions. Is the company required to meet any country-specific or regulatory requirements for data storage, particularly cloud-based storage? And what level of security does the service provider offer? For example, financial institutions including banks have strict security requirements in most countries due to legal regulations. Choose a software provider that has a broad range of information security controls designed to protect the confidentiality, integrity and availability of your information.


This website contains articles posted for informational and educational value. Paychex is not responsible for information contained within any of these materials. Any opinions expressed within materials are not necessarily the opinion of, or supported by, Paychex. The information in these materials should not be considered legal or accounting advice, and it should not substitute for legal, accounting, and other professional advice where the facts and circumstances warrant.
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