Accounting done over the internet
Accounting has been traditionally done using software hosted locally on a desktop computer's hard drive. Cloud accounting is executed using software that is hosted remotely online.
Cloud accounting basically means storing and accessing data and programs over the internet instead of your computer's hard drive. Cloud is just another word for the internet.
Benefits of Cloud Accounting
Cloud accounting software is hosted over the internet. You can access your software in the office, working from home, or on the road. When you are cloud based, your accounts and records are all saved and backed up with multiple levels of encryption. When using cloud accounting you have the opportunity to have a paperless office. Share and collaborate easily with staff, bookkeepers and accounting professionals. Stay organized on the go by scanning, sending an email or taking a picture of your invoices or receipts.
Downsides of Traditional Accounting
Traditional Accounting software requires you to have a dedicated hard drive where your software and financial data is stored. This is generally done in-house and all transaction are recorded on the premises. Software should be relicensed and updated every year to stay current. As your business grows so does your need for more hardware space to store data. A server could be lost due to malfunction, natural disaster or system breach. Your data may be permanently lost if you do not have a current backup. This makes collaborating with advisors difficult when sending memory sticks as neither party is looking at the same data.