Cloud-Based Accounting For Small Businesses: Why Should You Switch?

Small company owners find financial management difficult and time-consuming! What if you could arrange yourself faster and save time?

Cloud-based accounting helps. As the globe moves towards digital solutions for daily activities, more small businesses are moving their accounting to the cloud.

In this blog post, we explore why so many entrepreneurs have made the jump from traditional software to cloud-based accounting software—including greater efficiency, increased collaboration possibilities, affordability and security features.

So whether you’re starting on your own or already established but unsure about jumping into a new system – read on as we break down why you should make the switch now!

Let's get started!

What Is Cloud Accounting? 

Accounting carried out online or through other remote access forms is commonly called cloud accounting. To express it in a clearer and more all-encompassing light, cloud accounting and cloud computing refer to storing information and gaining access to that information through the internet. It is common to practise referring to the internet when referring to the "cloud."

The internet is imagined as a vast cloud of information that permeates our surroundings yet is neither visible nor solid. The cloud lets you take your organisation to the top of the corporate world. It takes a major technological and operational overhaul but it will pay off.

Desktop and cloud accounting have a few differences, but one stands out. What you perform on cloud accounting software is transferred to the cloud, and your database is enhanced.

Accountants used desktop-based accounting software until recently when cloud-based software became accessible. This was especially problematic since you needed to control your stored and owned data access.

Even after paying a significant amount to have the software installed, there remains a persistent requirement to upgrade the version of the application. The entire investment into this programme is substantial; to tell you the truth, it's optional.

The owners of companies have recently begun to understand the significance of using a cloud-based accounting system. As a result, a significant number of them have transitioned away from utilising more conventional approaches in favour of this emerging kind of technological advancement.

How Is Cloud Accounting Different From Traditional Accounting Software?

Accounting done through the cloud is a recent innovation in the accounting field. Cloud accounting is an alternative to traditional accounting that depends on paper documents and software installed locally. Instead of using these methods, cloud accounting makes use of software that is hosted on the internet.

The traditional accounting technique has several drawbacks:

• High costs for both the licence and the maintenance of the program
• It is difficult to maintain backups.
• Because it isn't automated, upgrading is complicated and time-consuming.
• Availability can be tough to discuss with all of the important workers because of the single-user accessibility.
• Since the information is not being collected in real time, it is possible that it needs to be constantly updated and accurate.

Accounting in the cloud has the following benefits over conventional accounting, which have helped it surpass these downsides:

• Keeping your financial data held online is not only more secure but also more handy.
• It gives companies up-to-the-minute information regarding how their finances are performing.
• Sharing information with accountants and other finance experts is made simpler as a result of this.
• Because it is hosted in the cloud, the software's backups and updates are performed automatically.
• Access can be granted to several users simultaneously from a variety of locations.

Consequently, cloud accounting is rapidly developing into one of the most preferred options for new and fledgling companies.

What Are The Benefits Of Cloud Accounting? 

1. Getting Access To Real-Time Information

The unquenchable thirst for velocity will, certainty, lead each and every proprietor of a company to this essential component provided by cloud accounting software.

Cloud accounting software provides real-time financial information, which is useful if you want to develop your firm swiftly. Therefore, employ cloud accounting software.

Desktop accounting software requires much time to go through historical data from days or months ago. Possibly a time-consuming process.

If you have real-time information, you may design a more trustworthy plan for your company's future and make more accurate business decisions.

2. Handle Your Accounts From Anywhere

Cloud accounting software gives you 24/7 access to your company's finances. You may access this data from anywhere in the world. Start with a stable internet connection and your company's login info.

You need to do nothing else. This will improve staff and consumer relations and be advantageous overall. Users have the choice of arranging the material and figuring out how to show it coherently and well-organised because the platform is so simple to access.

3. Facilitating A Paperless Environment

It should not be a shock that the greater the size of the company, the greater the amount of transactional data and clutter produced.

When dealing with cloud-based software, you won't have to physically save any invoices, bills, costs, or anything else. Online access to all information is the main reason.

Every transaction and record will be safely stored on your cloud for years until you decide to delete them or remove irrelevant data.

Paper records can be readily deleted with this technique. As a result, you would not need to search through all of your possessions looking for a single sheet of paper that included the specifics of an operation that occurred many months ago.

4. No Need For Monthly Software Updates

The cloud accounting system your organisation bought will instantly start utilising the latest version when you log in.

However, desktop accounting software demands you to sit down and upgrade often to use new features. Accounting cloud software differs.

This will save you time and money on utilities. The programme manufacturer is responsible for any technical faults, so you won't need to make any changes to fix them.

This relieves you of a lot of duty because the software supplier resolves difficulties with the program they build almost promptly.

5. A Secured Method Of Sharing Data

Managing sensitive information that pertains to your business operations and interactions can be done in a secure manner by utilising accounting software that is hosted in the cloud.

As the proprietor, you are responsible for granting access to anybody you choose, and only those individuals who obtain access straight from you will be capable of controlling the information kept in the cloud software you use.

Your firm's bookkeepers, your accountant, and any financial planners that your business may employ are the persons who, in addition to yourself, require immediate access to the data. You are in complete command of deciding who else in the world can view your firm's records.

Because it reduces the number of emails sent back and forth, which means that fewer people will have access to the private data being shared and updated, this method is both truly secure and extremely efficient.

6. Live Feed From Bank Account 

When you connect your personal bank account straight to the account your business maintains on the cloud accounting software, you may take advantage of the live feed the software provides from your account.

Because the software automatically makes the necessary adjustments, you won't waste time sitting down and keying in each bank statement you get by hand. Instead, when a live stream is available, the data from your bank account will quickly be imported into your software without you being required to take any action regarding it.

The entire process of accumulating and preserving data and providing you with an accurate summary of your financial standing will unquestionably be sped up as a result of this.

If you keep an up-to-date perspective of your firm's savings, it will be easier for you to make judgments regarding the company that demands big contributions. In addition, whenever you have quick access to information regarding the status of the funds in your company bank account, you will be in a stronger position to evaluate your firm's requirements.

Why Accounting Software Is Important For Small Businesses

Planning, recognising potentially problematic situations, recognising advantages, and demonstrating a firm's profitability are all made easier with supervision. You will be capable of making investments, applying for loans, and estimating your future tax obligations with complete assurance now that you have this knowledge.

The following is a list of the seven characteristics that make accounting software so beneficial for proprietors of small businesses:

1. Bank And Credit Card Syncing

The most effective way accounting software may save you time is by allowing you to synchronise your financial data, including your bank accounts and credit cards. When you eliminate the need to enter financial information manually, you free up workday hours that you can spend concentrating on other critical company duties.

2. Invoicing

The software you use to create invoices is essential to your accounting platform. It indicates that once the payment has been made, the status of having paid for it will be updated automatically.

Your accounting software will automatically record the transaction once it has been paid as long as your bank and credit card are linked and your invoice is registered when sent out. After the invoice has been sent, you will not be responsible for entering any data. The majority of the solutions will come with templates.

3. Accounts Receivable

After adding invoices to your programme, you may examine your accounts receivable. Money owing to the firm. Having a summary of your accounts receivable is important for financial statements.

4. Accounts Payable

The process of monitoring all the bills and other expenditures for which the company is responsible but has not yet done so is known as accounts payable. By entering them into the system, your accounting system may make it much simpler for you to keep track of things.

You will be able to prioritise payments and ensure that none of them is missed if you include due dates and ensure that this chart of accounts is easy to examine. When you record this data, you also can evaluate your profitability depending on the payments that come into and leave your business.

5. Online Payment Collection

The majority of the tools and capabilities available for accounting software will permit you to accept payments from clients via the Internet. Because of this, it will be much simpler for consumers to pay their invoices, which will enable you to receive payments in a more timely fashion.

6. Shared Access

Open access has several benefits, some of which may be enjoyed inside and beyond your company. On the firm's end, you can offer access to team members who pay bills or send invoices to clients.

Accessing your financial data may help your bookkeeper, accountant, and other tax specialists outside your organisation. This will save them time and your money.

7. Financial Statement Preparation

You should readily produce balance sheets, profit and loss statements, and cash flow statements with the assistance of your accounting software. Because all of your financial data is contained within a single system, the analytics capabilities enable you to generate sophisticated reports quickly.

Best Accounting Software for Small Businesses 

1. Xero

Established in 2006 in New Zealand, Xero has over 3 million customers globally. This accounting software is popular in the UK, NZ, and Australia. Xero has approximately 4,000 employees and is growing quickly in the US and abroad.

Early, Growing, and Established are the three levels of monthly subscriptions that may be purchased alongside Xero's full-service payroll add-on. In addition, the business offers a free trial period of thirty days.

The Early plan restricts usage and permits the entry of a maximum of 20 invoices or bids and five bills per month. This restricted plan can be appropriate for a micro business that does a limited number of high-ticket operations each month, like a consulting firm or a small service provider.

The Growing and Established plans include limitless invoices and bills in their respective offerings. The only difference between the two is that the established plan comes with extra functionalities, such as multi-currency support, cost control, and project costing capabilities. Hubdoc is a solution for capturing bills and receipts, including all three plans.

2. QuickBooks Online

QuickBooks Online is a popular accounting software solution for smaller enterprises and their bookkeeping and tax specialists. A web browser or mobile app may access the cloud-hosted program.

The monthly subscription for this programme may be increased as a company expands, and the mobile app that can be utilised to accept funds, check reports, take a picture of a receipt, and track business mileage comes with a wide variety of configuration possibilities. QuickBooks Payroll is a system that fully integrates with QuickBooks Online and is available to companies searching for a payroll solution.

Each plan comes with increasingly sophisticated capabilities, such as cash flow monitoring, inventory management, time tracking, and extra users. The vast majority of small service-based enterprises will discover that Simple Start satisfies all their requirements. However, essentials or Plus will have more possibilities for stock and modifications available for product-based small enterprises than Essentials.

Every plan includes support for integration with third-party applications like Stripe and PayPal. In addition, the app store for QuickBooks Online organises all available apps according to their respective functions. It offers informative samples of the advantages offered by every programme.

Effective Cloud Accounting Software For Small Businesses

There is no question that cloud accounting has made organisations more efficient and helped cut down on significant expenditures associated with maintenance and utility bills.

On the other hand, large and complicated cloud accounting software might not be the best choice for smaller companies because they operate on more straightforward principles and have fewer employees to manage the books.

After that, you might want a task that is easy and incredibly efficient. A piece of software designed for and only for use by small firms, one that satisfies all of the requirements and preferences that are unique to companies of this size and scope.

In situations like this, you require software that can effectively use the resources provided by technology and provide its customers with only the most beneficial functions.

A one-stop software solution for small businesses, whether established or just starting out. One easy-to-use system handles all of these capabilities, including invoice production, expenditure tracking, expert forecasts, a simple dashboard, payment reminders, and more.

Content Summary

• As the globe moves towards digital solutions for daily activities, more small businesses are moving their accounting to the cloud.
• In this blog post, we explore why so many entrepreneurs have made the jump from traditional software to cloud-based accounting software—including greater efficiency, increased collaboration possibilities, affordability and security features.
• What you perform on cloud accounting software is transferred to the cloud, and your database is enhanced.
• Accountants used desktop-based accounting software until recently when cloud-based software became accessible.
• The owners of companies have recently begun to understand the significance of using a cloud-based accounting system.
• Accounting done through the cloud is a recent innovation in the accounting field.
• Cloud accounting is an alternative to traditional accounting that depends on paper documents and software installed locally.
• Instead of using these methods, cloud accounting makes use of software that is hosted on the internet.
• Consequently, cloud accounting is rapidly developing into one of the most preferred options for new and fledgling companies.
• The unquenchable thirst for velocity will, certainty, lead each and every proprietor of a company to this essential component provided by cloud accounting software.
• Cloud accounting software provides real-time financial information, which is useful if you want to develop your firm swiftly.
• Therefore, employ cloud accounting software.
• Cloud accounting software gives you 24/7 access to your company's finances.
• When dealing with cloud-based software, you won't have to physically save any invoices, bills, costs, or anything else.
• Online access to all information is the main reason.
• Accounting cloud software differs.
• Managing sensitive information that pertains to your business operations and interactions can be done in a secure manner by utilising accounting software that is hosted in the cloud.
• As the proprietor, you are responsible for granting access to anybody you choose, and only those individuals who obtain access straight from you will be capable of controlling the information kept in the cloud software you use.
• Your firm's bookkeepers, your accountant, and any financial planners that your business may employ are the persons who, in addition to yourself, require immediate access to the data.
• You are in complete command of deciding who else in the world can view your firm's records.
• When you connect your personal bank account straight to the account your business maintains on the cloud accounting software, you may take advantage of the live feed the software provides from your account.
• Instead, when a live stream is available, the data from your bank account will quickly be imported into your software without you being required to take any action regarding it.
• If you keep an up-to-date perspective of your firm's savings, it will be easier for you to make judgments regarding the company that demands big contributions.
• In addition, whenever you have quick access to information regarding the status of the funds in your company bank account, you will be in a stronger position to evaluate your firm's requirements.
• The most effective way accounting software may save you time is by allowing you to synchronise your financial data, including your bank accounts and credit cards.
• The software you use to create invoices is essential to your accounting platform.
• Your accounting software will automatically record the transaction once it has been paid as long as your bank and credit card are linked and your invoice is registered when sent out.
• After adding invoices to your programme, you may examine your accounts receivable.
• By entering them into the system, your accounting system may make it much simpler for you to keep track of things.
• The majority of the tools and capabilities available for accounting software will permit you to accept payments from clients via the Internet.
• Accessing your financial data may help your bookkeeper, accountant, and other tax specialists outside your organisation.
• You should readily produce balance sheets, profit and loss statements, and cash flow statements with the assistance of your accounting software.
• Because all of your financial data is contained within a single system, the analytics capabilities enable you to generate sophisticated reports quickly.
• This accounting software is popular in the UK, NZ, and Australia.
• The Growing and Established plans include limitless invoices and bills in their respective offerings.
• The only difference between the two is that the established plan comes with extra functionalities, such as multi-currency support, cost control, and project costing capabilities.
• QuickBooks Online is a popular accounting software solution for smaller enterprises and their bookkeeping and tax specialists.
• QuickBooks Payroll is a system that fully integrates with QuickBooks Online and is available to companies searching for a payroll solution.
• The vast majority of small service-based enterprises will discover that Simple Start satisfies all their requirements.
• However, essentials or Plus will have more possibilities for stock and modifications available for product-based small enterprises than Essentials.
• Every plan includes support for integration with third-party applications like Stripe and PayPal.
• In addition, the app store for QuickBooks Online organises all available apps according to their respective functions.
• There is no question that cloud accounting has made organisations more efficient and helped cut down on significant expenditures associated with maintenance and utility bills.
• On the other hand, large and complicated cloud accounting software might not be the best choice for smaller companies because they operate on more straightforward principles and have fewer employees to manage the books.
• After that, you might want a task that is easy and incredibly efficient.
• A piece of software designed for and only for use by small firms, one that satisfies all of the requirements and preferences that are unique to companies of this size and scope.
• A one-stop software solution for small businesses, whether established or just starting out.
• One easy-to-use system handles all of these capabilities, including invoice production, expenditure tracking, expert forecasts, a simple dashboard, payment reminders, and more.