In the distant past, financial records were kept in actual books of account. While this is still possible, digital accounting systems are more likely to be utilised today, with a wide variety of choice available for the modern business owner. Although these may offer some flexibility and can ensure that you are implementing a system that will meet the needs of your business, it can be confusing or overwhelming if you are not familiar with the intricacies of accounting particularly as well as business in general.
Accounting software was originally sold as packages for which you paid a once-off licence fee, often a substantial amount, so that you could install and run it on your own PC. There are still many of these packages available in today’s market, however there is an increasing amount of cloud-based systems, either versions of desktop packages or new developments that are changing the way we manage our accounts.
Why cloud-based software can be better
Particularly for small businesses, cloud-based software can deliver numerous significant benefits:
- Cost. Desktop software requires the payment of an upfront licence fee that can make a significant impact on your bank balance. For cloud-based systems however, you generally pay a small monthly subscription which varies depending on your individual needs and the service plan you choose. You may even be able to undertake a free trial to see if a system is suitable before committing any money.
- Flexibility. As a freelancer or small business owner, you are unlikely to be a financial expert and therefore may find it difficult to choose the software that’s best for you. Making the wrong choice in a desktop package can be an expensive mistake whereas choosing the incorrect cloud-based software won’t have affect your business as negatively. You won’t be tied in to a long-term contract and it is easier to switch to another system after at least gaining some experience. And many systems do provide facilities to convert easily from other software.
- Future Proof. Accounting software doesn’t stand still, at the very least having to react to changes in legislation. This can be expensive for desktop systems because you are required to pay for upgrades.With cloud-based software, ongoing development is generally covered by the monthly fee so you benefit from upgrades as soon as they become available.
- Security. One thing many people overlook is the need to have backup copies of data. This is particularly important for accounting records where data loss can be catastrophic for the business. With a cloud-based service, you do not need to worry about remembering to take regular back-ups and storing them securely off-site because your data is backed up at a secure server for you. If this is a concern, be sure to check the arrangement.
- User Friendly. Accounting, like IT, is renowned for its use of jargon and can somewhat of a mystery for the uninitiated. However, most modern accounting software aims to keep things simple with inbuilt help, graphical displays, intuitive input screens and dashboards that provide easy access to important information. Many will supply links to other systems, such as your bank so you can check your statements easily.
- Data on the Move. Desktop systems only allow access to accounting data while you’re in the office. Cloud-based software, on the other hand, has mobile versions that allow access from any device that has internet access and the correct security clearance. You can therefore process your accounting records at any time and from anywhere to see up-to-date information.
Making the right choice
When choosing accounting software, several factors need to be considered to determine suitability. These include the size of your business and the number of users, features needed, cost, ease of set up and use, support provided, versions available and customisability.
Most applications have several versions that are aimed at different levels and types of businesses. Leading ones include:
- Intuit QuickBooks Online. Intuit was one of pioneers of accounting system development and remains a market leader with its move to cloud-based products. It offers a range of service plans from Self-Employed to the comprehensive Online Plus, all providing connection to bank accounts and a host of other features, although no multiple currencies.
- Xero is a well-established cloud-based solution that offers Starter, Standard and Premium service plans. Each covers data import, quotation, order and invoice generation, bank reconciliation and limited payroll. The Starter plan places limits on transactions that don’t apply to the others and the Premium plan has multi-currency.
- Free Agent is more expensive than Xero but additionally offers some project management functions and time tracking. There are service plans aimed at sole traders, partnerships and limited companies that have features appropriate for those types of business. The last two plans also have payroll functionality.
- GoDaddy Bookkeeping is simple to set up and use, being mainly aimed at the self-employed. Its big selling point is integration with Amazon, eBay and Etsy that makes it attractive for entrepreneurs using those sites.
- Sage 50c Premium Accounting is a top of the range package from a market leader and that’s reflected in a relatively high price. It has desktop origins but has now been adapted with cloud-base functionality that enables remote access.
There are some free versions of cloud-based software available that might provide useful experience. However, they tend to be quite basic and you’ll most likely have to upgrade to a paid version for anything more than the simplest requirements.
Most cloud-based software is relatively simple to use and have several service plans that you can move through as your business expands and its requirements grow. But, as a small business owner, you may feel unwilling or unable to tackle financial systems and may not have the time to get too involved.
That is where Phoenix Cloud Accounting can help, because we provide fully supported accounting software across a range of service plans. This gives all the benefits of cloud-based solutions but with the added advantage of available accountants who can not only advise and support you but also undertake much of the work on your behalf. Saving you both time and money.
So, ensure you carefully consider all the options and what they offer in entirety before making your choice.