Should Small Business Owners Use Cloud Accounting Software?

by Sean Ross

3 min read

Cloud software is becoming more and more prevalent for both personal and professional users. By learning what exactly cloud software is, how it works and the benefits of using it, you can decide if it is right for your business.

What Is Cloud Software?

Cloud software is internet-based data storage and data networking. Instead of storing information on your desktop computer, you store the data with an off-site entity housed on the internet. This is comparable to computers that share data within an office on a networked computer drive. However, instead of networking with an on-site server, you are connected to an off-site database on the internet. Because the data is stored on the internet, it is accessible in the office, from home or even on your mobile device. Colloquially, businesses that use cloud software are said to be “in the cloud.”

What Are the Benefits of Cloud Software for Small Businesses?

There are numerous benefits to storing your business data in the cloud. Because you can access your business’ data from anywhere at any time, the ease of access is a significant benefit. You can log in at home, at work or on your mobile device. Because cloud software updates in real time, you know you are accessing the most current version of the data.Moreover, because all data is put into one database, it reduces inputting time and increases efficiency. You do not have to update the same piece of information multiple times. Say, for example, you do not use cloud software, and at a business lunch a client informs you he recently moved. You have to update his contact information in your mobile device and when you get back to the office, you have to also update it in the client management software on your computer. With cloud software, you simply log in to your database directly from your mobile device and put in the new address. As this updates in real time, any other employee who has access to the database immediately has the new address. Cloud-based software therefore promotes reliability and consistency.Another benefit to cloud software is the cost reduction. Since everything is hosted off-site, you no longer have to pay for on-site data storage. In addition, since the data in the cloud is continuously backed up, you do not have to pay for expensive external hard drives to backup your data within the office.

Are There Any Drawbacks to Cloud Software?

Implementing a cloud-based software system can be time-consuming. The migration of data from your computer and in-house hosting can be challenging. You may experience discrepancies with currency conversions or data encryption issues. As a result, you will want to verify the data is accurate once the migration is complete. That said, the migration itself should only take a few days depending on the amount of data being transferred. Typically, when a business moves to the cloud, it exports all data it uses regularly. This can include any accounting software used on-site, as well as client management databases.Depending on the cloud software provider, you may receive additional support during the migration. Most providers complete the migration for you, but it is still recommended that you audit the data to ensure accuracy.For security, cloud software is more safe than in-house data storage for a few reasons. First, as cloud data is stored online, the cloud service provider has encrypted the data for protection. Data that is stored on-site faces the same risk of hackers trying to gain access. Moreover, in-house data faces more inherent risks. A business could be robbed, with the desktop computers stolen. If the data is stored off-site in the cloud, no data is stored on the desktop itself, protecting both business and client information. An office could also be at risk for fires, flooding or a myriad of other natural disasters, which puts on-site data storage at risk. If the storage malfunctions or crashes, it may halt production. None of the aforementioned issues occur with cloud-based business software.Another security feature is accountability. Most cloud-based software tracks which user edited a piece of data. Even though it may seem overwhelming to grant employees access to a master database, the usage of the database is tracked. Employees sign in with an individual username and password, and when data is altered, the system records the username, date and time of the alteration. This is a powerful feature as it holds each employee responsible for the work they input into the system, and any changes they make.

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