Benefits of Cloud Accounting
As a small business owner, keeping track of your income, expenses, and other accounting matters are an essential task. Handling your accounting in the cloud offers a number of important benefits to help you do this more easily and effectively.
What are the benefits of cloud accounting?
1. Enhanced security
An online accounting solution provides you with greater security than you can obtain with desktop accounting software. Cloud accounting gives you automatic backups so data is never lost, in contrast to desktop software that must be backed up intentionally. Most cloud accounting solutions encrypt your data so it can't be read by others.
2. More accessibility
With cloud accounting, you have convenient access to your books from any location with an Internet connection. If your small business is in the startup phase, chances are you're on the road and working odd hours from home. Cloud accounting programs give you easy access to the books from any computer, smartphone, or tablet. Many programs even have their own mobile app for a mobile, user-friendly experience.
3. Paperless feature
This may not be an entirely paperless society, as was predicted more than 40 years ago, but shoeboxes of receipts are a thing of the past. What's more, today receipts and invoices may not even be issued on paper, with transmissions sent by email or text messages. Cloud accounting is today's solution for going paperless and becoming more sustainable. It can be used to seamlessly record receipts or invoices in whatever way you receive them. Paperless accounting frees up time and improves efficiency by de-cluttering financial records.
4. Real-time recording of income and expenses
A cloud accounting system lets you record your income and expenses as they happen, in real time and from any location as long as you can access your online system. Some cloud options allow smartphone cameras to capture images of receipts or invoices for storage in the cloud. This not only gets rid of annoying scraps of paper, but also alleviates the possibility for incomplete recording when relying on memory and a handful of paper receipts.
5. Promotes collaboration
Desktop accounting programs are installed on one computer, which means that collaborating with team members or other staff requires transferring information to a disk or USB stick—an activity that can lead to lost information and security breaches. In addition, information stored on a laptop or computer can fall into the wrong hands if the device is lost or stolen.
With a cloud accounting system, information is available to all authorized individuals on any device at any time. This simplifies collaborative efforts, saves time, and reduces the opportunity for mishaps. It also enables outside accountants or bookkeepers to have access to your business's financial information without having to schedule appointments. Most importantly, information stored in a cloud-based program is only available to individuals with the appropriate credentials for access.
6. Ease of use
Most online accounting systems are designed with the non-accountant in mind. You don't have to understand accounting concepts to be successful in recording your income and expenses. Prompts in your cloud accounting solution help to assure that you enter the correct data into specific fields. Any problems or confusion can be resolved with the accounting system's technicians who are accessible through bot chats or telephone.
7. More control of financial processes
By maintaining your accounting information in the cloud, you can access it at anytime from anywhere (as long as you have an Internet connection). This allows to you to easily manage such important financial functions as:
- Monitoring cash flow
- Viewing aging receivables
- Paying upcoming bills
Cost benefits of cloud accounting software
Cloud accounting is a subscription-based service. Like rent, you pay a monthly fee. You can easily build the monthly cost into your budget to know with certainty what you spend each year. The cost of cloud computing options varies widely, but there's an affordable choice available for the needs of any type of business.
In contrast, with traditional accounting software, you buy a license to use the product that's downloaded to your computer. The cost, which varies according to the brand you choose, the add-on options you need, and in some cases the number of users, can be hundreds of dollars. Tax wise, it works out to be about the same: the monthly fee for the cloud option is fully deductible, while you likely can write off the cost of purchasing upfront. But you'll need to purchase new software in a few years because the brand stops supporting old versions; cloud accounting is continually updated to the latest version.
Advantages of cloud accounting for startups and small businesses
As a startup, you want to devote your time to growing your business. With the availability of cloud accounting, now you can do just that. You can meet your tax obligations to keep books and records (a task imposed on businesses by the IRS), stay on top of your customers and cash flow, and stick to your budget using a cloud accounting solution. Whether you're in your office or on the road, you can also gain data security, ease of collaboration, and other advantages discussed here.
Investing in cloud accounting software
If you're looking to streamline some financial aspects of your business and better secure your financial data, consider the benefits of cloud accounting. Explore your choices to find the one that meets your needs. Whichever you choose, your online accounting can also dovetail with payroll services.