According to one recent study, between 40 and 46% of small business owners, in particular, say that bookkeeping and especially taxes are the least enjoyable parts of running their businesses. This is because these processes are equal parts labor-intensive, time-consuming and complicated - leading to a perfect storm in the best possible way.
That's part of the reason why there's been such a movement over the last few years away from desktop accounting software and into the world of the cloud. Rather than installing a piece of software on a single machine - which you then always need physical access to in order to leverage - the cloud makes applications and data available anywhere at any time.
But at the same time, it may not necessarily be an easy leap for all companies to make. If you're thinking of moving from desktop to cloud accounting, there are a few key things you'll want to keep in mind.
The Ins and Outs of Cloud AccountingIn general, cloud accounting software is an efficient way to help businesses track both their expenses and their sales - thus giving them the information they need to run their company in the most effective way possible. Remember that cash flow issues are one of the major reasons organizations fail in the first place. Therefore, it stands to reason that the more insight you have into money coming into and out of the organization, the better the position you're in to make the most informed decisions possible.
A lot of small business owners begin this process in a more traditional way - using spreadsheets. The issue is that once the data contained within those spreadsheets becomes too complex, they become almost unwieldy to work with. They put a strain on both the computer and the user. Likewise, it requires more time to keep these documents up-to-date and it puts unnecessary strain on accountants and other professionals.
To relieve some of the burden, business owners usually hire a part-time local bookkeeper and invest in a traditional desktop solution - truly the "next step up" from those aforementioned spreadsheets. This will certainly work well in the early stages of a company, as it gives financial professionals everything they need to make sure the business is operating strongly. At a certain point, however, there may be some limitations. As an organization continues to grow a part-time accountant may spend more time wading through information, trying to find what they're looking for, than actually acting on it.
That's when cloud-based software typically comes into the equation. As stated, you're talking about a system that stores data and software on the Internet as opposed to a single machine. So now, you don't have to bring in an in-house accountant at all - so long as you give them permission they can see every last bit of data in the system from the comfort of their own office. They don't even have to make in-person visits unless it's for some type of requested meeting.
The major benefit of cloud accounting software is that a lot of solutions are very easy to use by design. They're built for non-accounting professionals. Once you're familiar with the system, you're essentially ready to go - making it easier to take control over the finances and trajectory of your business.
As is true with desktop accounting software, cloud-based solutions offer a wide range of bookkeeping functions. This often includes but is certainly not limited to tracking money coming into and out of accounts, sending invoices to customers (and reconciling them once they have been paid) creating profiles of customers and vendors, and more. Some solutions can even synchronize with your bank and make sure that all financial statements are reconciled automatically - freeing up your valuable time to focus on more important matters.
Most cloud-based solutions operate on a subscription model, however, where desktop solutions operate on a license model. This means that instead of only paying once as you would with a desktop tool, you'll essentially be locking yourself into a recurring payment plan. This is also something you should keep in mind.
In the end, it's important to consider your own unique needs when choosing desktop or cloud accounting. If you have a large number of users who need access to the system, the cloud is likely the way to go. But as always, you'll want to carefully weigh your options to come up with the solution that is right for your own unique use case.
About Martinez & Shanken, PLLC
Martinez & Shanken, PLLC is a Certified Public Accountant (CPA) firm based in Gilbert, Arizona. We provide a full range of accounting, bookkeeping, consulting, outsourcing and business services. Partners Deborah Martinez and Earl Shanken work to ensure your business accounting is done with integrity and to your satisfaction.
