By Parker Hansen

Every day, more and more businesses are turning to cloud computing. From connected appliances to Internet-based education programs, people all over the world are utilizing the cloud as a way of connecting with customers and making their own business practices more effective. One business practice than an increasing number of businesses are turning to Internet-based technology for is accounting. Today, small businesses across the globe are taking advantage of the cloud when it comes to managing their finances, and fewer and fewer startups now depend on a hard drive to store and access their accounting data.

The Differences Between Cloud and Traditional Accounting Software

Cloud accounting software utilizes the cloud to store accounting data, making financial information accessible to owners and employees anywhere that the Internet is available. With traditional accounting software, a company has one dedicated hard drive on which accounting software is installed and financial data is recorded. With cloud accounting software, the hard drive becomes unnecessary, and data can be entered and information accessed from anywhere there is Internet.

Additionally, cloud accounting software tends to be a more affordable accounting solution than traditional accounting software, since upfront costs are usually less than traditional accounting software and the hardware that is required to run in. Cloud-based accounting programs automatically back up data, which can make this option more secure. Finally, cloud accounting software often functions across different platforms, while traditional accounting software may only work on one platform.

When Cloud Accounting Software Should Be Used Vs. Traditional Accounting Software

Both cloud and traditional accounting software have their benefits, both of which should be considered when making a purchasing decision. Companies that might consider taking advantage of the benefits of cloud accounting include the following:

  • Companies that have a small budget, since it often costs less over time to invest in cloud accounting software than traditional accounting software.
  • Businesses with employees who work remotely, since they may prefer the convenience and accessibility of a cloud solution.
  • Small companies who cannot provide themselves with adequate security, since many cloud computing companies can keep their information safer from security threats than they can.
  • Businesses that want to avoid any potential physical mishaps with technology at an office that could destroy hard drives and, thus, data (fire, flood, burglary, etc.)

Despite the benefits of cloud accounting, some businesses may still prefer to utilize traditional accounting software. Some situations where traditional software might be beneficial include the following:

  • Businesses who want tight control over accounting data and don’t want it accessed anywhere there is a non-secure wireless network or where they cannot directly monitor usage.
  • Companies that hold very sensitive financial information (banks, etc.), because they don’t want any third-parties to have access to it, and they can completely control the level of security by keeping it in-house.
  • Businesses with an uncertain future, since many cloud accounting software programs require a company to sign a usage contract — which can be problematic for a company that doesn’t know how long it’s going to be around.

Many small startups with limited budgets and a high level of trust in technology are choosing cloud accounting services over traditional accounting programs. This makes sense, since cloud accounting can offer them the value, security, and level of convenience they need. There are many outstanding types of accounting software available to small companies that are growing, both hard-drive and cloud-based. These programs can help keep finances straight to ensure a successful and fruitful commercial future.

Parker Hansen is a computer security expert and writer for TopTenReviews.com. In his free time he enjoys blogging and web design.