Cloud vs. Traditional Accounting Software: Which Should You Use?

  • Accounting on cloud

At least 50 percent of all businesses set part of their budget for cloud computing in 2013. Likewise with half of software developers. As the world’s data goes to remote hosting, it’s hard to imagine that very recently, all business accounting software was purchased on a disk or a download and confined to a single computer or small group of computers in a physical office, with that office responsible for the data’s storage and security.

There are many reasons to go to the cloud, although some businesses choose to host accounting data the old-fashioned way. Follow this guide to see if the cloud is right for you.


With every passing month, more and more data is trusted to the cloud.

Pro: Clouds Are Cheap

When you pay to have your accounting data hosted in the cloud, that hosting subscription is essentially your only expenditure. Locally hosted accounting software can be expensive by itself. When you consider that most require licensing fees to add it to other computers, costs really start to rise.

Pro: Accessibility

Locally hosted accounting software spends its life on one or two computers. Those computers becomes the office’s accounting station. With cloud accounting, your data can be accessed from absolutely anywhere, even your phone or tablet, with nothing more than a password.

Pro: They Do it for You

When you keep your accounting in-house, not only do you have to buy the software, but you have to store the data on a hard drive, in a databank, or on a server. That hardware must be purchased and maintained. With the cloud, there is no hardware or IT investment.

Security: Pros

When you move your accounting to the cloud, you move with it the security risks that come with locally hosted data. Fires, floods, burglaries, hacking, digital theft – or the still-common hard-drive crash – are all real potential disasters that can and do wipe out data and leave businesses devastated. Remotely hosted accounting data is stored far away on secure servers that are overseen by companies that keep them safe, at the right temperature, and (relatively) secure from online attacks.

Security: Cons

“Relatively” is the key word. As cloud storage becomes more and more popular, the data they hold becomes more and more of a target. When you turn your data over to the cloud, you’re entrusting it to a group of people you’ll never meet in a facility you’ll never see. Some companies – usually large firms with lots of sensitive data such as banks and healthcare institutions – would benefit from keeping their data close to home.


For most businesses, the cloud is cost effective and sensible.

There is a reason that cloud-based computing is taking off. It works. The cloud usually improves accessibility; reduces cost; takes the security bonus off of your business; frees up local databank, hard drive or server space; and requires essentially no commitment to IT or infrastructure. There are a handful of businesses that may benefit from on-site accounting. Most of them are large, well-monied firms that have major investments in IT and security. For the rest of us, the cloud makes sense.

Photo credits: FreeDigitalPhotos.net/Stuart Miles

Andrew Lisa is a freelance writer living in Los Angeles. He writes about small business management and office software.

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