Any self-employed business owner who wants to get serious about their business will need to keep records of how the business is doing. There are various ways this can be done. In the simplest of cases records can be kept with a checkbook register. A self-employed individual who needs more complex solutions often moves on to excel but over time outgrows it.
The search for book keeping solutions is normally torn between using a cloud based or desktop solution. In this article I focus on the advantages and disadvantages on choosing to go to the cloud.
Future articles will discuss the following:
Components to look for when choosing accounting software
Comparison of QuickBooks, Xero and Freshbooks
Definition of cloud solution
A cloud solution is a term used to describe hosted services on the internet. For example, you can chose to use QuickBooks online (the cloud) or QuickBooks desktop (your computer).
Advantages of cloud solution
Easy collaboration
One of the greatest advantages of moving to the cloud is the ease of sharing files with employees, clients or peers regardless of location. Collaboration and interactions with others is made much easier on the cloud.
Easy maintenance
With cloud based solution the provider is responsible for maintaining the software. You no longer have to worry about a crashed server
Convenience
You can access your file any place and anywhere. Most cloud services have a 99.9% uptime.
Easy version tracking
When sharing files in a desktop application, sometimes there is confusion as to what is the most updated version of the file. With cloud based solution this problem is eliminated.
Disadvantages of cloud solution
Loss of control
One of the biggest disadvantage of using cloud technology is you lose control over the software application. You are dependent on the provider and if something goes wrong a non-responsive vendor could cause a big problem. Let us say payroll is due, and your cloud software is down. You will have some very unhappy employees on your hand.
Down time
If you need to use the software while the provider is maintaining it, you have no choice but to wait.
Monthly fees
Cloud based solutions require monthly fees.
The cloud versus desktop debate is really a personal one. It all depends on what your dominant needs are. If collaboration and easy accessibility are more important to you then the discomfort of losing control will be minor. Cloud based solution require a reputable provider as unknown providers could cause you more problems than its worth. Beware of bookkeeping solutions that are not widely accepted as you can find yourself stuck if you ever get in a jam.
For this month only subscribe to my newsletter (on the right) and I will also send you an excel template that creates financial statements by entering data from your checkbook register.