Cloud Accounting: What it is and its benefits

What is Cloud Accounting?

Cloud accounting is like desktop accounting, but instead of installing a program, you access your accounting software online. Basically, it takes the fundamentals of double-entry bookkeeping and business accounting and turns them into a program that is hosted on remote servers.

There is a wide range of cloud-computing applications you’ve probably used before that work the same way, like email (think Gmail, Outlook, and iCloud) or your internet banking apps. So, for cloud accounting systems, you don’t boot up your accounting program: you simply log in with an internet connection.

How Cloud Accounting Works

All cloud accounting platforms work like other cloud-based providers or SaaS (software-as-a-service) solutions. What you need to do is:

1. Find a provider.
2. Sign up/subscribe to a free trial
3. Set up your accounts
4. Enter/import your financial data
5. Manage your finances and business processes online

It’s that simple. There are many cloud accounting products, so it is worth comparing providers to find the right plan for you.

Key Benefits of Cloud Accounting for Small Businesses

Being on the cloud isn’t just about online accounting. There are heaps of benefits that suit small businesses, where time is a limited resource:

Save Time with Automation

Small businesses struggle with time-consuming admin. With cloud software being the industry norm, there are heaps of automated tools designed to help time-constrained business owners.

• Automated, recurring professional invoices: Repeatedly creating invoices for the same types of jobs can be a headache. With automated invoices, you create repeatable tasks, giving you time to spend elsewhere in your business.
• Automated bank transactions/feeds: Bank reconciliation is a major process that requires attention to detail and knowing your transaction history. With automated bank feeds, you set the conditions and reduce the time it takes to match and reconcile.
• Automated BAS calculation: Business activity statements (BAS) are a monthly or quarterly task for every GST-registered business. Automated BAS reduces the time needed to compile and sort journal entries and transactions for BAS reporting.

Real-Time Financial Visibility

Small business owners need to have their financial information readily available at all times. By providing real-time reporting and visibility into your financial health and cash flow, cloud accounting software reduces the time users spend looking for reports and getting numbers to make important business decisions.

Stay ATO Compliant

Compliance takes up a chunk of admin time. It’s also important to get it right, as there are real consequences from the ATO. With cloud accounting software, compliance updates and management are built in, helping businesses stay on top of their tax obligations.

Work from Anywhere

Since your accounting software is hosted on cloud servers, you can log in anytime, anywhere, as long as you have an internet connection. This is especially useful for small business owners on the go. Take, for example, a tradie who works more offsite than they do in an office. With cloud accounting, the tradie can send their invoices from their phone.

Reduce Errors

With automated tools, live reporting, and compliant systems, you can catch errors before they happen and significantly reduce them with accounting software.

Cloud Accounting vs Traditional Accounting Software

While both versions support accounting, the differences between traditional and cloud accounting software go beyond access and cloud-based servers.

• Real-time collaboration: Cloud accounting software enables business owners to grant multiple users access to the same financial data and work on it simultaneously. Traditional accounting software requires downloading a copy of a working file and sending it to the other user. Not to mention that the other user needs to have purchased their own version and have it installed on their computer.
• Automatic backups and updates: Cloud systems enable backups and updates on the server side, rather than requiring users to manually update their software and manage dedicated storage on their personal devices.
• Third-party applications: Cloud accounting systems have APIs — connections between software — that provide flexibility and integration with other software, whereas desktop software is what it is, out of the retail box.

How to Choose the Right Cloud Accounting Software

For choosing the right software for your business, here is a checklist that you should incorporate in your decision-making:

1. Costs: Do the software costs — most likely subscription fees for SaaS — meet your expectations or budget?
2. Features: Does the software provider have the right features for your business?
3. Support: Are there any support options available? This is a must for accounting, as errors and technical issues are always a possibility.
4. Integrations: Does your accounting software integrate with a core business process that you can’t live without?

Features to Look for in Cloud Accounting Software

There are some non-negotiables that every business owner should look out for when choosing a cloud accounting provider.

Invoicing & Payments

It is important that the software you choose allows you to send professional invoices and also receive payments. Representing your brand is also a must when sending online invoices, so customisable invoices (such as the ability to add your logo or brand colours) are a great option to have.

Payroll & STP Compliance

Adding payroll management to your accounting software is a must for businesses with employees and for those looking to scale and add future workers.

Expense Tracking

Expense tracking, reporting, and managing employee expenses are important for any business to keep budgets in line and cash flow in check.

Bank Reconciliation

Automatic bank feeds that link your bank accounts to your software are a must-have for all cloud accounting systems; without them, bank reconciliation becomes a manual process that business owners look to reduce/remove.

Why Choose Reckon Cloud Accounting Software?

Reckon cloud software scales with your business needs at affordable prices.

• Choose a package that fits your budget: Need accounting, payroll, or both? Reckon Software lets you choose from tiered packages so you can select what your business actually needs.
• Compliance sorted: With BAS, STP, and GST reporting at your fingertips, Reckon software lets businesses operate with certainty that taxes and governance aren’t an issue.
• Online, chat, and phone support: Whether it’s a quick solution via AI chat or hands-on phone support, Reckon’s support system is robust, provides help when you need it, and comes free with every subscription.
• Invoice and Payroll App ecosystem: Need to work on the go? Reckon has dedicated companion apps for invoicing and payroll that keep your system up to date in real time. Great for those who go without a personal laptop/desktop.

FAQs on cloud accounting software