The word “Cloud” in cloud accounting refers to cloud computing technology. So first, let us understand what cloud computing technology is. The emergence of cloud technology is one of the top technological trends in recent times. Though the jargon seems complex, in essence, it is a straightforward concept and one that you are already aware of in your everyday life.
Cloud computing is the provision of all computing services through the internet. It allows you to access information remotely through virtual space. You can check your bank details through your mobile phone or any other device connected to the internet, simply because of cloud computing technology.
Here we explain more about why your business should use cloud accounting platforms.
What is cloud accounting?
These are accounting software that integrates cloud computing technology into it. This software has all the functionalities of desktop-based accounting software but shifts the whole process to the virtual space and dilates upon it.
Initially, your business needs to subscribe to online accounting software. There are various cloud accounting software providers in the market such as Xero.
You can choose the best fit for your business based on your business size and accounting needs. Once your company has subscribed to a platform, you can move your accounting books to the cloud.
From then onwards, you can access your business accounts and critical numbers anytime, from any device that connects to the internet. This ability increases your efficiency of bookkeeping and puts your financial administration for a smooth-running show. Click here to find out more about the bookkeeping services we offer.
What are the pros of using cloud accounting platforms for your business?
There are many advantages of using cloud based software including:
Anytime, anywhere access to information
This facility is one of the key benefits of using cloud accounting platforms in the business. In the traditional accounting platforms, you can gain access to your business accounting information only through desktops to which you install the accounting software.
Still, by using cloud accounting platforms, you can access the information anytime through any device that connects to the internet. You can log in through a web browser or the mobile app provided by your cloud accounting platform provider and access your accounting information.
Easily record and track your business expenses
Are you able to claim all your business expenses when filing your company tax return? Most of the time, you forget the costs you incurred or misplace the expense receipts by filing your company tax return. Unless you instantly record all the expenses as they occur to the desktop-based accounting software, there is a high chance you miss out on any payments.
It is possible to record all your business expenses in the cloud accounting platforms and easily track them automatically. Most of the cloud accounting software connects to business bank accounts and credit cards; hence the transactions are updated to the accounting platforms instantly as they occur.
This process speeds up the bank reconciliation and provides an accurate cash position for your business. Further, since the information you are accessing is real-time, you can successfully plan your future spending and make effective & efficient business and financial decisions.
It saves money and time
It is always a financial burden for a business operating on a small scale when they incur a large sum of money on licensing or purchasing traditional accounting software.
In a cloud accounting platform, you neither need such a significant investment nor need a server to host. You only make monthly or annual subscriptions to the providers based on the agreement. Many cloud accounting platforms offer various programmes that are available individually, often with free trials. Further, these programmes remotely work from the provider’s server.
Traditionally, the software needs to be upgraded manually, incurring high costs along with the expensive licensing. Further, they should go through the hassle of installing the machine separately after new releases. Alternatively, in the cloud accounting platform, the software provider takes care of all the updates. Hence your business will always work with the latest software version. This also reduces any cost of hiring IT personnel.
Collaboration with team
It is much easier and quicker to exchange data and documents through the cloud on a real-time basis.
Consider a scenario where you are thinking of buying a piece of machinery for your business. You end up having several queries like, should I go for a lease or a loan? How will this impact the tax? And so on. Traditionally you call your accountant and ask for advice. They will advise you on this matter only if you share the financial details manually, which consumes time. Alternatively, if your business uses a cloud accounting platform, your accountants can log in to that software and analyse the figure and advice you promptly.
In traditional accounting software, you should buy licenses to grant multiple people access to information. Cloud software provides numerous users with access at cost-efficiency. It is also possible to control the level of access to the data based on the individuals roles and authority.
Pay taxes online quickly
Usage of cloud software facilitates much quicker and simpler online tax payments. And also, as the transaction you make is recorded instantly in digital format, you can easily export them to the tax authority when filing the relevant tax files.
Security and automated backup
One of the significant factors that the users of cloud-based accounting platforms are concerned about, is their security.
A cloud accounting platform is one of the highly secure ways of storing information. This is because only those who have the login details to the software can access the information. You can also restrict the view of information based on the individuals’ roles and authority. Further, the providers of cloud accounting software ensure flawless security and privacy of data.
It wasn’t so long when ample daily, monthly and yearly information was backed up manually on a scheduled basis. Cloud accounting technology facilitates automatic backups and restoration. Here the possibility of foul-up is reduced. The data is backed up automatically and moved to another location. Even in the event of physical damage like fire, all of your information is safe and secure.
An accounting system is crucial in determining the success and failure of a business. The cloud accounting platform, a new technological development, has a high potential to impact all kinds of businesses globally, irrespective of their scales.
As explained above in detail, cloud accounting platforms save you precious time, money, and resources, thereby streamlining your financial administration, and facilitating you to focus on more critical aspects of your business.
At present, small businesses are taking advantage of cloud accounting platforms as they have enabled them to cut down their costs drastically. They no longer need to spend lump sum funds on obtaining licenses or purchasing traditional accounting software.
Very few start-ups depend on conventional desktop-based accounting software to store and access their accounting data. The sooner you switch your business to a cloud-based accounting platform, the better off you will be. Choose the best cloud accounting platform that suits your business to reap the maximum benefits.