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Technology Tip

Technology Tip
Dave Pelland has extensive experience covering the business use of technology, networking and communications tools by companies of all sizes. Dave's editorial and corporate experience includes more than 10 years editing an electronic technology and communications industry newsletter for a global professional services firm.

Cloud Accounting Services for Small Businesses

Cloud Accounting Services for Small Businesses

Although accurate financial records are critical to the success of small businesses, bookkeeping and accounting are often beyond the expertise of many small business owners, and traditionally have required a lot of paperwork that many people found confusing.

But as with most small business applications, a variety of cloud applications are available that can help remove a lot of the challenging guesswork from small business accounting.

Cloud applications can handle basic functions such as accounts payable and receivables, and payroll, and many applications offer modules to help companies with more specific or challenging accounting requirements.

Cloud Access

Cloud accounting applications offer a variety of potential advantages for small business owners, starting with an easier ability to get up and running.

Because you are accessing the software and your data over a web connection, you don't have to spend time installing or configuring an application to run on your network. You simply create an account and you're ready to start using the software.

Cloud accounting applications also offer the ability to integrate with your banks' website, saving you the time and effort associated with entering data manually.

You can enter transactions directly, and the application will offer automated reconciliation tools to help make sure your books balance more efficiently than trying to do so manually or relying on spreadsheets alone.

Another advantage with cloud applications is that you can access or update your financial records virtually anywhere you have a web connection, whether through your laptop or a mobile device. This remote access capability makes it very easy to enter expenses on a road trip, for example, or to create a customer invoice immediately after completing a sale or performing a service.

Cloud-based accounting software also lets you authorize other users, such as trusted team members, your accountant, payroll service or other financial advisors, to access your financial records. This can help improve collaboration with your advisors, while reducing the need to exchange paperwork or to enter data manually more than once.

Cloud accounting programs are typically offered on a monthly subscription basis, with free or low-cost accounts available for users with simple needs, and prices increasing depending on the number of users and features that are accessed.

Popular cloud accounting suites include QuickBooks Online, Zero, Less Accounting, Wave, Freshbooks and others. Some may emphasize different features than others, so it's a good idea to try a couple of programs to see which fits your needs best.

Potential Drawbacks

While cloud accounting software offers a number of potential advantages over spreadsheets or installed software, there are a couple of potential drawbacks that small business owners should be aware of.

Many small business owners are understandably concerned about placing their company's critical financial data on a cloud provider's server, but in most instances, the provider is likely to be better able to protect this data than the average small business. As you consider cloud providers, it's a good idea to check their websites to read about their security and backup policies and procedures.

Cloud accounting software tends to be aimed at companies with general needs, so if your company is in an industry that has specific requirements, a cloud application may not be the best choice. But for most companies, however, using the cloud to track and manage your financial data saves time and provides a less confusing, more effective alternative to spreadsheets or installed accounting software.

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