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Why Cloud Accounting is More Secure than Local Accounting Software


Do you lose sleep at night worrying about the security of your small business accounting records? You may have either personally spent hours entering transactions or you compensate your employees to do so, and one of your biggest fears is that something will put your accounting system and your data at risk. Cloud accounting is one option that can put your mind at ease.

Disadvantages to Maintaining your Accounting System on your PC Using Local Accounting Software

  1. Since your accounting software and all of your data is stored on your computer, you have to make sure you have a disaster recovery plan. Your computer is a risk in the event of fire, flood, electrical surge, or a computer crash, and that can mean an interruption to your business that could cost you a great deal of time and money.
  2. Your computer is also at risk for hackers, viruses, worms, Trojan horses, spyware, identity theft, intellectual property theft, and spam; all threats to some of the most sensitive material in your entire business.
  3. You laptop could be stolen along with your stored data.
  4. Fraud risk increases when your information is maintained on your computer, and preventing unauthorized access to your bank accounts is a top priority.
  5. Technology is always changing and improving. At the same time, additional risks arise. Unless you are an IT expert, keeping up with the latest technology in data security can be too time-consuming when you're working to grow a successful business.

Why Cloud Accounting May be More Secure Than Local Accounting Software

When using cloud accounting only authorized users have access to the software and data, system backups occur automatically, and everything is stored off-site on servers maintained by a data service center. Cloud-based accounting systems can also offer fraud protection, because they can be set up to put controls in place to prevent unauthorized access to bank accounts and provide an electronic audit trail of what actions have been performed by whom and at what time.

There are typically two organizations involved when you choose cloud accounting: your cloud computing service vendor and the data center the vendor uses to store your data. Since cloud computing has become more in demand, concern for the safety and security of data on the cloud has also been a consideration for business owners. This in itself has lead to consumer demand for a high level of security offered by vendors and data centers. This can be accomplished by having a strong set of controls in place to protect the computer software and your data.

So, how do you know if the service you choose has adequate controls in place? One way is to see if the data center your vendor uses has received an Service Organization Controls (SOC) report issued by the AICPA (American Institute of Certified Public Accountants). A SOC report results from an examination of the organization's controls and includes an audit and examination of areas such as infrastructure, software, people, procedures, and data.

Your cloud vendor and data center should also use third-party services to monitor and test their systems.

What to Look For in the Information Security in the Cloud:

  • User access methods and permissions
  • Extensive firewall technology
  • Regular security audits
  • Off-site backup methods
  • Physically secure and safe data storage locations with security presence and biometric scanners to prevent unauthorized access
  • Third-party monitoring

It is important to do your homework and make sure you choose a Cloud provider that has the necessary controls in place to protect your data. Once that research is done, you will find this option provides a much more secure environment for your accounting system and data than anything you could put into place on your local computer.


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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