man at laptop with paperwork
Online accounting is not only more convenient and secure compared to offline accounting software, but it is also more affordable. — Getty Images/Pinkypills

Accounting is one of the most difficult business processes for small business owners to learn and handle themselves.

Fortunately, online accounting software now exists. This software is designed with business owners in mind — allowing small business owners to manage their own accounts and only go to professionals when needed.

Also known as cloud-based accounting, online accounting software has many benefits, including:

  • Helping your company manage its assets
  • Preparing taxes
  • Entering data automatically
  • Preparing cash flow statements
  • Logging employee and contractor payroll

If you are considering cloud-based online accounting software, here’s what you need to know.

Why online accounting software is on the rise

Online accounting has quickly become the preferred way to manage business finances over offline (or desktop) accounting software, for many reasons. The biggest difference between online and offline software is how you access your data.

  • Traditional desktop software stores data on your computer and can only be accessed by sharing files from one computer to another.
  • Online accounting software, on the other hand, stores your data on a server and can be managed from any computer with an internet connection.

Below are a few key features of online accounting software, and why it has risen substantially in popularity.

Anytime, anywhere access

Accountants using offline software must email or manually transfer a file from one computer to another. This can result in double handling the data, which wastes time at best, and loses money at the worst.

Online accounting, because it can be accessed from any device, allows multiple users to access one file at the same time, which ensures everyone is working with the same set of data. This is also known as a “single ledger” accounting, as only one version of the file exists.

Online accounting has quickly become the preferable way to manage business finances.

Automatic software updates

Desktop software requires the individual user to maintain and update the software when a new version is available. If the software developer releases a security patch, it is the user’s responsibility to download the patch and update the system. If multiple accountants need to update the software on their machines, you introduce user error into the equation.

Online accounting software is often updated by the software company automatically, without the users’ awareness. Automatic upgrades to the latest version of the software helps eliminate user error.

Managed security

Companies that use desktop software are responsible for securing the data on their devices, both physically and virtually. If a laptop with your business’s accounting information is stolen, your business is at risk. Furthermore, many people don’t backup their files on a regular basis, which may result in a loss of data.

With online accounting, the security is managed by the software company, as with software updates. Security services include regular data backups with 128-bit encryption. However, in light of the many data breaches over the past few years, some small businesses have opted to secure their data on their own computers or servers rather than rely on a software company.

Payroll integrations

One of the best things about online accounting software is that it can directly manage and automate your payroll. This saves time and energy because it eliminates having to manually input data to pay your employees, or integrate your accounting software with a third-party payroll service.

On a budget? Online accounting software options

Accounting software costs range anywhere from free to a few hundred dollars per month.

Intuit’s Quickbooks, for example, is an accounting software that has long been the favorite for businesses of all sizes, but comes with a hefty price tag for the Pro version ($299.95 for a single user).

Fortunately, QuickBooks Online has subscription offerings that begin as low as $20 per month. Many other major companies offer affordable versions, as well.

However, if your budget allows only for free accounting software, options include Wave, ZipBooks, and SlickPie.

Free online accounting software is still helpful for many businesses manage their finances without a high price tag, but it’s important to note that they lack the full feature suite you would find in popular paid programs.

CO— does not review or recommend products or services. For more information on choosing the best accounting software, visit our friends at business.com.

CO— aims to bring you inspiration from leading respected experts. However, before making any business decision, you should consult a professional who can advise you based on your individual situation.

Published March 29, 2019