What are the differences between desktop accounting software and cloud accounting software?
I'm considering the two options mentioned above, but I'm not that sure about what the differences actually are? Both in terms of how simple it is to use and what the benefits to my business would be from a desktop or cloud accounting software.
I run a small shop, and I employ 22 people in all, including casuals, etc.
Cloud software is where you use the software but the software and the data is not stored on your desktop. It is kept in the 'cloud'. So for example if you use 'Xero' this is a pure cloud software because nothing is stored on your machine. They are kept on Xero's servers. It has a number of advantages:
1. The software is always up to date and you do not have to do any updates or deal with CD's etc
2. The data is safe so you cannot loose it as it is kept on Xero's servers and duplicated.
3. Your accountant and other people can access the data quickly and easily. You do not have to do backups or worry about USB sticks etc.
4. The cloud accounting software is very easy to use.
The only real issue is that if you have slow internet it can be a bit slow. Many worry about the security of their data but we have been using it for 4 years now with multiple clients and we have never had a breach.
We recommend cloud accounting software because it is so easy to use. We tend to offer our clients more advise too because we have access to the data 24/7. Our fees tend to be lower too because we are not messing about with USB stick and software updates.
Desktop software is where the data is kept on your computer. My biggest issue with this is that if you computer breaks down you might lose the data. This could cause you some serious problems.
Both systems will work for you but you might find with cloud software it is less hassle. Be careful though. MYOB promote themselves as cloud but it is not really. Your data is in the cloud. You still have to put software on your machine.
In terms of payroll both systems should deal with it but ith cloud software you might find you can do more like send new employee tax declaration forms directly to the ATO. In desktop versions you might find you have to print it and mail it to the ATO. It is the same with End of your payment summaries. These can easily be emailed and lodged to the ATO.
I hope this help!
A key main difference for small business is it efficiently gives you, your staff, contractors, book keeper and accountant all real time access to the same primary account system. Automated bank feeds can reduce cost / time in doing reconciliations.
Other benefit is it can provide seamless integration into other cloud systems you may be running, such us shopping carts, CRMS and billing systems etc.
I agree with most of what has been said already.
Desktop software is old technology (it was created when PC's first became prevalent in the late 1980's and early 1990's). Whilst it was great at the time, it's now a dinasour.
Cloud systems are the way of the future (and as has been said below, beware of MYOB as it is not a true cloud system). The most prevalent cloud system in Australia is Xero - it is the leader in this space and having been one of the very early adopters 7 years ago I can attest to the quality of the system, the security of data and the ecosystem that has been created around it that enables you to link your accounting system to inventory/POS, payroll and HR systems, CRM and so on.
My experience with implementing Xero with my clients was a saving of 50-75% of the bookkeeping data entry time due to the automations within the system.
For payroll Xero has a basic payroll within the system and does allow for use of timesheets too, But for a more comprehensive payroll system, the most popular is Deputy - nore info at https://www.xero.com/au/marketplace/app/deputy/
If you'd like to read more about the differences between cloud accounting systems and desktop software, I wrote the definitive book on the subject - Cloud Accounting - How to Transform Your Business with Cloud Accounting - which you can access here:https://amandafisher.com.au/connected-technology/
1. The cost
SaaS is definitely cheaper than buyin outright.
2. Functionality upgrades
Some functionality in saas maybe given for free to subscribers, even if it is for a fee, it won't be as if buying a whole new product.
3. Product compatibility
SaaS subscriber definitely get their services compatible to as many platform as possible.
E.g. I bought my myob for $600 few years back, and now it doesn't work with windows 8 or newer.
This situation will not happe if I was a saas subscriber.
4. Data integrity
Most SaaS promises 99.99% uptime to access their services as well as providing weekly or even daily backup of their product.
However, this doesn't guarantee that you will get all your data back when the company gone bankrupt.
On the other hand, buying a product outright will give you opportunity to have a similar backup mechanism in your local office that will go with you 'forever'.
That's a little share from my experience.
Hopefully that helps,
Personally having used both within my business and judging by your requirements, a cloud-based solution would be the best option suitable to your needs.
Basically, desktop is the original method of managing your books. With the advent of technology there are other options for you to choose from. In the long-run desktop will be less effective, more costly in terms of system updates and doesn’t offer flexibility for your firm.
The cloud however, is a platform that allows for you to access your data online – anytime, anywhere and from any device!
Major benefits of the cloud:
1. Being in the cloud allows for you to work remotely, you don’t always have to be in the office giving you more freedom
2. It is secure and backed up daily
3. It is extremely easy to navigate
4. All of your financial data is available in real-time and from one source of truth
5. You have access to real-time, accurate financial data which gives you a better understanding of your cash flow
6. If you are to grow your business, your accounting platform can easily adapt to the expansion
Disadvantages of Desktop Accounting:
1. It is not as flexible in comparison to the online platforms
2. If your computer was to crash you could possibly lose all of your data, unless you back up daily
3. You can’t connect cloud based apps or add-ons to desktop software. Apps often provide greater functionality for your business
4. Due to manual processing, you may have higher bookkeeping fees. A cloud platform will allow for you to streamline the majority of your process
There are many different cloud accounting platforms you can choose from, the major ones being Xero, Intuit QBO & MYOB.
One great point to mention however is that as you have 22 casual staff, automated payroll solutions will be great for you as you can move away from manual time sheets and your employees can access all their details, payslips, entry to request annual leave and entry of their daily hours all in one location!
Have a look at the services of HR2PAY www.hr2pay.com.au which would be great for your payroll and HR needs.
Please contact me for any further information and hope this has helped.
The exodus to the cloud has been on for many years now, and like everything, there are good and bad things to consider. The key difference between the two, as others have mentioned already, is where your data is kept. If you value your data, and don't like the idea of others having access to it, then you should keep it offline. If you don't really care who you allow access to your data, then take it to the cloud.
The biggest benefit cloud-based technologies offer is transportability. That is, being able to access your data no matter where you are. But consider this: if you use your laptop to access your data, then what does it matter if it's in the cloud or in the actual laptop you're lugging around with you, after all?
The most solid benefit of a desktop system is that you decide who has access to it, when and how they can have access to it. Handing it over to a cloud-based system puts it all within easy reach of its employees, hackers, and ofcourse the government.
As a developer of both online and desktop solutions, the last two major projects I've completed were for very large organisations who had specific needs that no existing cloud or desktop based software was able to handle. In both cases, given the highly proprietary nature of the data the systems recorded, quite frankly, I would think they would have to be lunatics to put any of it in the cloud.
Following the herd isn't always a good idea. Just ask the next lemming who runs passed your window ;-)
Cloud accounting, also known as online accounting, has many features that give it an advantage over desktop computerised accounting systems.
The key differences between cloud and computerised accounting systems are as follows:
Cloud systems allow multi-users to work at the same time and is accessible across multiple devices such as laptops, PCs and mobile phones. All that’s needed is an internet connection, unlike a desktop accounting software which requires the device the software is installed on.
2. Data security
Data is backed up automatically in cloud accounting, and you don’t need to wait for the file to finish saving before exiting your cloud accounting software.
You usually pay a monthly or yearly subscription fee for cloud accounting instead of an expensive one-off fee for desktop software.
Cloud software providers usually offer feature upgrades for free or for a small fee, as opposed to desktop systems that usually require you to buy a whole new product for an upgrade.
For businesses that plan on scaling up, it's much easier to adapt with cloud accounting software than desktop. You can simply upgrade your package to suit your new requirements instead of buying a whole new system.
I think the best way to decide if cloud is for you is to do a free trial on popular brands among business owners, such as Xero, MYOB or QuickBooks online. They all usually offer a 30-day trial for new customers, or you can consult your bookkeeper or accountant.