Benefits of Cloud Accounting
Updated: Jun 3, 2022
In the past, QuickBooks Desktop was the standard accounting software used by many small business owners. Over the years, more and more businesses have switched to cloud-based accounting software, such as QuickBooks Online and Xero. The switch to cloud accounting software is a trend that will continue, and there are good reasons for it. This article will outline some of the benefits available from using cloud-based accounting software.
Can Access Anywhere with an Internet Connection
All you need is a tablet, phone, or computer and internet connection to access your company's cloud accounting software. Unlike traditional desktop/server-based accounting software, you do not need to be physically at your computer to log into your company's books. You could be on the road and access it from your phone.
Software is Updated Automatically
Software updates are automatic, so there are no updates to run to get the latest version.
Allows for Collaboration with Accountant/Bookkeeper
Since the company file is stored in the cloud, multiple users could access the same information. Traditional accounting software required that a company file be sent back and forth. With cloud-based accounting software, all users can log into the current company file. It allows for collaboration among team members within a company and with outside users such as accountants and bookkeepers.
An Accountant Can Access Information Needed for Tax Planning
Collaboration within the same file makes it easy for your accountant to obtain the information required to perform proactive tax planning.
Multiple Users – Owner & Team Can Access
Cloud accounting software such as QuickBooks Online allows for multiple users, which allows different team members performing other functions (such as accounts receivable or accounts payable) to work within the same company file at the same time.
All data is stored in the cloud by the accounting software vendor. Having data backed up in the cloud eliminates the need to create backup copies stored on your local computer or server.
Cloud accounting software such as QuickBooks Online includes built-in reporting metrics that you can quickly view from a dashboard. You can review the metrics contained within the dashboard to get a quick overview of how the business is performing.
Many time-saving features are built into cloud accounting software, such as connecting the company's file to the business bank and credit card accounts and setting up automated "rules" for coding income and expense items. An activity that has cleared the bank will sync into the cloud accounting software via the bank connection. The transactions from the bank feed will still need to be categorized. Still, the automation saves time by not having to be manually entered into the software.
There are "rules" that you can set up to take the bank & credit feed one step closer to automation. For recurring expenses paid to the same vendor, "rules" could be set up to allow the transactions from the bank feed to be automatically categorized to the appropriate expense category. For example, recurring monthly payments to Verizon for a phone bill could be set up to be automatically categorized from the bank feed to "telephone" expense.
Integrations with other apps
Many apps can connect to cloud accounting software to provide additional features beyond what is included within the software. Some apps are industry-specific, such as point-of-sale apps for restaurants. Some apps help streamline the payment of bills, such as bill.com, or provide additional analytical analysis, such as Fathom. QuickBooks Online has an app store that includes features and reviews of the various apps that will integrate with QuickBooks Online.
The Future of Accounting
Outlined above are some of the main benefits of cloud-based accounting software. With software companies continually investing in cloud accounting software, there will be additional advancements with even more time-saving benefits in the future. The ability to collaborate within cloud accounting software makes it invaluable to small business owners and their teams.