It's no secret that traditional desktop accounting software is difficult and expensive for small businesses to implement and maintain.
However, new cloud-based accounting platforms aim to provide comprehensive accounting features without the high costs and IT demands of legacy software.
In this review, we will compare the top 5 cloud accounting solutions on the market, outlining the key strengths of each to help you determine the best choice for your small business needs.
Introduction
Vintti helps businesses streamline accounting and finance operations by providing access to specialized talent in South America. As experts in cross-border staffing, we understand the key challenges companies face when managing financial workflows.
In today's digital age, many businesses are adopting cloud-based solutions to simplify accounting. The cloud offers anytime, anywhere access to tools for tasks like invoicing, expense tracking, financial reporting, and more.
However, with many options on the market, it can be overwhelming to select the right platform. In this article, we'll compare some top contenders to help you choose an accounting software that aligns with your business goals and enables effective financial management.
Rather than investing in an expensive enterprise-level system, many small and mid-sized businesses can benefit from affordable cloud accounting platforms with robust core features. As your operations grow, the software scales flexibly with configurable modules and integrations.
Cloud solutions not only reduce costs associated with on-premise servers and desktop software, they streamline collaboration across remote finance teams. This allows staffing partners like Vintti to seamlessly integrate offshore talent into your workflows.
What accounting software do accountants recommend?
As a staffing agency focused on accounting and finance professionals, Vintti understands the importance of using the right accounting software. We work closely with accountants to understand which platforms they prefer to use and recommend to their clients.
Based on our experience and discussions with accounting professionals, QuickBooks Online from Intuit remains one of the most widely used and recommended cloud-based accounting software options, especially for small and medium-sized businesses.
QuickBooks Online offers robust core accounting features paired with an intuitive and user-friendly interface. It can track income and expenses, generate financial statements and reports, manage invoices and billing, reconcile bank accounts, and much more. Key reasons it tops accountants' lists include:
- Seamless integration with other business systems through open API
- Strong reporting with customizable charts, graphs, and dashboards
- Multiple user access with customizable permission levels
- Data accessibility from anywhere via web and mobile
- Scalability across various business sizes and verticals
With a trusted brand name and continual enhancements focused on accounting professionals' needs, QuickBooks Online delivers substantiated value. It streamlines collaboration between business owners and accountants.
Of course, assessing an organization's unique requirements and comparing solutions is prudent. But QuickBooks Online offers an excellent starting point with capabilities that address most small businesses' core financial processes. Paired with Vintti's specialized accounting talent, it enables seamless operations and growth.
What are the disadvantages of cloud accounting?
Adopting cloud-based accounting software can provide many benefits, but there are some potential drawbacks to consider as well.
Security and Compliance Risks
While cloud platforms often have robust security measures, storing sensitive financial data in the cloud can introduce some risk. Businesses must evaluate if their provider maintains adequate safeguards and complies with all relevant regulations.
There is also a dependence on the provider to manage security properly on an ongoing basis. This requires strong technology governance and policies within the organization to mitigate risks related to unauthorized exposure of confidential data.
Integration with Other Systems
For some businesses, especially those with specialized needs, popular cloud accounting platforms may not readily integrate with certain legacy or niche applications. This can complicate financial processes that span multiple systems.
Developing custom integrations can involve added costs and IT effort compared to software solutions that readily connect out-of-the-box.
Reliance on Internet Connectivity
Cloud accounting requires consistent, reliable internet access. For teams or locations with poor connectivity, this can hamper productivity and financial continuity. Firms should determine if they have the appropriate infrastructure to avoid disruption.
While many providers have continuity measures and offline modes to minimize downtime, dependence on external hosting means accounting processes can grind to a halt without an internet connection.
Ongoing Costs and Vendor Lock-in
Subscription licensing fees for cloud-based software, while typically more affordable upfront than on-premise solutions, represent recurring long-term expenses a business must budget for. And switching providers down the road once ingrained into operations can prove challenging.
To avoid unexpected price hikes or changes in service, companies should closely evaluate the vendor’s reputation and future direction before fully transitioning financial data into any cloud ecosystem.
What are the cloud-based solutions for accounting?
Cloud accounting (or online accounting) provides the same core functionality as desktop accounting software, with the added benefit of an always-up-to-date online solution. Rather than using a desktop application, users log into a cloud-based platform where data is stored securely on remote servers.
Some of the major advantages of cloud accounting platforms include:
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Accessibility - Data can be accessed anytime, anywhere with an internet connection. This enables remote collaboration between team members and flexibility to work outside the office.
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Automatic updates - No need to manually install software updates. The cloud platform is continuously updated in the background by the provider.
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Scalability - Cloud-based solutions easily scale with business growth. It's simple to add or remove users as needed.
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Disaster recovery - Data is backed up in the cloud, minimizing disruption in case of computer crashes or loss/theft of local data.
Popular cloud accounting platforms like QuickBooks Online and Xero provide robust accounting, invoicing, reporting, and more. When integrated with other cloud-based business apps, an end-to-end management ecosystem can be created to optimize operations.
For small businesses and startups, cloud platforms remove IT management headaches so they can instead focus time and effort on serving customers and expanding their company. The lower upfront costs, automatic updates, and subscription models provide compelling value.
What percentage of accounting professionals prefer cloud accounting?
Rather than discuss specific percentages, I believe focusing on the benefits of cloud accounting better serves Vintti's audience. Cloud solutions offer invaluable advantages for modern accounting teams, especially those managing international operations.
Cloud platforms facilitate seamless collaboration across locations and time zones. Data is updated in real-time, so remote teams access the same up-to-date information. This significantly cuts down on duplication of efforts and costly errors resulting from version control issues.
In addition, cloud systems scale flexibly with sudden business growth or mergers. Instead of investing in new servers and software, teams simply pay for increased capacity on demand.
However, it's worth noting cloud adoption does come with potential downsides regarding security and reliance on internet connectivity. Rigorous platform evaluations and data encryption protocols are critical safeguards.
Ultimately most modern accounting professionals leverage intuitive cloud-based tools to improve efficiency. But seamlessly integrating new team members with specialized expertise also plays a key role optimizing operations.
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Leveraging Cloud-Based Accounting Software Advantages
What is Cloud-Based Accounting?
Cloud-based accounting refers to accounting software solutions that are hosted on remote servers and accessed via the internet. This increasingly popular alternative to traditional desktop accounting software brings a number of key advantages, including:
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Automatic software updates: Cloud platforms release continuous updates behind the scenes so you always have the latest features and functionality. No more manual updating hassles.
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Accessibility from anywhere: As long as you have an internet connection, you can access your critical accounting data and tools on any device from any location. Perfect for today's remote workforce.
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Real-time collaboration: Cloud platforms allow for seamless collaboration across teams and third-party partners, with everyone accessing the same up-to-date financial data and documents in real-time.
In essence, cloud accounting solutions leverage the versatility, security, and connectivity of the internet to create a shared ecosystem for managing essential accounting tasks and gaining financial insights.
Cloud-Based Accounting Software vs Desktop: The Shift in Dynamics
The choice between cloud-based and traditional desktop accounting systems represents a key shift in software dynamics and capabilities:
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Accessibility: Desktop software is confined to a single computer, while cloud platforms allow browser-based remote access from any internet-connected device. Cell phones, tablets, laptops - your full accounting power is now portable.
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Updates: Desktop platforms require manual updating or installation of new versions, often at an additional cost. Cloud systems automatically apply updates behind the scenes at no extra charge, ensuring you always have the latest features.
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Data backup & security: Responsibility for data backups and system security lies fully with the end user for desktop software. Leading cloud platforms leverage advanced infrastructure and protocols to fully manage and protect your data in the cloud.
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Collaboration: Cloud accounting systems enable real-time collaboration across users and locations through shared access to financial documents, reports, tasks and workflows. Desktop platforms lack cloud's innate collaborative powers.
In summary, while desktop retains a niche role, cloud-based solutions like QuickBooks Online and Xero represent the new standard for versatility, reliability, and seamless financial collaboration.
Evaluating the Benefits: Why Small Businesses Are Moving to the Cloud
The unique advantages of cloud-based accounting platforms over traditional solutions explain the accelerating adoption among small businesses:
Easy Access and Sharing
Cloud software allows remote teams to concurrently access accounting data and collaborate effectively from any internet-connected device. Perfect for today's increasingly distributed work environment.
Continuous and Automated Updates
No more waiting around for the latest features or security patches. Critical updates happen automatically behind the scene so you always have the most up-to-date capabilities.
Significant Cost Savings
No need for local servers and IT infrastructure associated with desktop software and data management. The cloud provides all this through an affordable subscription model.
Enhanced Data Security
Leading cloud platforms leverage robust encryption protocols and infrastructure to keep financial data safe. No more concerns around physical hardware failure or data loss.
Seamless Scalability
Cloud accounting solutions easily scale with your changing business needs, whether that's adding more users or integrating with other software platforms as your operations grow.
In summary, today's cloud delivers accounting versatility, reliability, and cost-effectiveness that no desktop solution can fully match. It's no wonder small businesses are rapidly migrating over.
Must-Have Features in Cloud-Based Accounting Platforms
When evaluating cloud accounting solutions for your small business, be sure to assess both the core accounting capabilities and the usability of key features such as:
Workflow Automation
Platforms like Xero provide easy-to-configure accounting workflows for invoicing, bill payments, reporting, and more. This eliminates manual processes and ensures critical steps never get missed.
Robust and Customizable Reporting
Modern systems include hundreds of pre-built reports covering all essential accounting insights. Plus, support custom reporting so you can easily analyze financial data from any angle relevant to your business.
Unlimited Invoicing
Monthly invoice volume should never slow down your accounting capabilities. Quality cloud platforms enable sending unlimited professional invoices to capture every client payment.
Complete Bank Reconciliations
Properly reconciling your various bank accounts is vital for cashflow clarity. Cloud software fully automates this cumbersome task for unlimited accounts to give you up-to-date visibility.
Third-Party Integrations
As your business grows, you'll likely adopt additional systems for payroll, POS, ecommerce, and so on. Be sure your accounting platform offers deep and reliable integrations with common third-party solutions.
By keeping these key criteria in mind, you'll be well equipped to select the ideal cloud accounting system to meet your expanding small business needs well into the future.
Top Cloud-Based Accounting Software for Small Business
We review the 5 best cloud accounting solutions for small businesses today based on costs, ease of use, features, integrations, and customer support.
QuickBooks Online: A Comprehensive Tool
QuickBooks Online is the leading cloud accounting software for small businesses. It offers a comprehensive set of financial management tools including invoicing, expense tracking, reporting, inventory management and more.
Key benefits:
- Powerful reporting and dashboards to visualize business performance
- Easy invoicing with automatic reminders and tracking
- Time tracking for projects and tasks
- Seamless integration with many popular small business apps
With strong customer support and a wide range of plans, QuickBooks Online works well for all types of small businesses from solopreneurs to companies with a few employees. It's a bit more costly than competitors but offers a very robust feature set.
Xero: Intuitive and Scalable
Xero is a beautiful yet powerful cloud accounting solution built specifically for small businesses. Key features include:
- User-friendly dashboards with visual reports
- Bank reconciliation and tracking
- 700+ app integrations
- Robust inventory and order management
Xero makes accounting intuitive even for non-finance people. It focuses on automation to save time on critical financial tasks. With customizable invoices, expense claims, purchase orders and more, Xero can scale as your business grows.
While Xero is more affordable than QuickBooks Online, it matches QBO's ease of use and features. For rapidly growing ecommerce businesses, Xero is a top choice.
FreshBooks: Simplified Invoicing and Billing
FreshBooks is arguably the best accounting software for freelancers and solopreneurs who need to track time and bill clients. Features include:
- Online client portal for seamless invoicing
- Easy time tracking with running timers
- Expenses tracking with automatic receipts
- Customizable reports and financial insights
With its simple, clean interface, FreshBooks simplifies the accounting process. Yet it still packs an impressive suite of features from accounting basics to advanced reporting. For bootstrapped entrepreneurs or solo businesses, it's a cost-effective pick.
Wave: Budget-Friendly Accounting
Wave is a 100% free cloud accounting solution ideal for early-stage and very small businesses. Although functionality is limited compared to paid options, Wave still offers:
- Invoicing and estimates creation
- Bank connections and transactions management
- Payroll features including payments, taxes, and reporting
As it's free indefinitely, Wave works for startups and solopreneurs on a very tight budget. The interface is easy to use with automatic reconciliations. However, support is primarily self-serve through the site's knowledge base.
Zoho Books: Automation at an Affordable Price
Zoho Books makes cloud accounting affordable for small businesses with prices starting at just $9 a month. It focuses heavily on automation with tools to simplify billing, collecting payments, and more.
Highly useful features include:
- Automatic estimates, invoices, bills, and payments
- Time tracking and project management
- Inventory management with serial number and batch tracking
- Reports on accounts payable/receivable, profit and loss, and more
For the price, Zoho Books packs an impressive set of accounting features focused on saving time. With its integration ecosystem, it can connect to many everyday business apps.
Deciding Factors: Cloud-Based Accounting Software vs Desktop
We highlight the unique strengths of each leading cloud accounting platform that set them apart, and how they compare with traditional desktop solutions.
QuickBooks Online: Mastering Reporting and App Integration
QuickBooks Online stands out with its powerful financial reporting capabilities through custom, pre-built, and automated reports. The dynamic reporting engine enables users to visualize critical business metrics, trends, and insights to inform smarter decisions.
Compared to desktop versions, QuickBooks Online offers superior integration with hundreds of business applications through open APIs. Users can connect QuickBooks Online with their existing tools like payroll, POS, ecommerce platforms, and more to centralize financial data flows. This saves considerable time by eliminating manual data entry across systems.
The cloud delivery model also provides anytime, anywhere access with 24/7 reliability and automated backups. QuickBooks Online keeps pace with the latest features and updates without requiring users to manually install anything. For traditional desktop users hesitant to make the switch, QuickBooks also offers a Desktop Sync feature to help transition financial data seamlessly to the cloud.
Xero: Master of Dashboards and User Experience
Xero stands out for its user experience, which offers an intuitive and visually stunning dashboard. Key metrics, graphs, reports, and visualizations provide real-time insights into cash flow, profits, revenue, payables, receivables, and account balances. This high level of transparency helps managers, bookkeepers, and small business owners monitor financial KPIs and spot issues early.
The dashboard also simplifies reconciliation with automatic bank feeds, transaction categorization, and matching algorithms to prevent duplicate data entry. Users can attach photos of receipts, record mileage, log employee hours, and track other business activities right from their mobile device. This delivers an integrated view of finances to enhance productivity and decision making efficiency.
FreshBooks: Effortless Cloud-Based Billing Software
As one of the pioneers in online accounting software, FreshBooks shines when it comes to hassle-free invoicing, billing, and payments. It provides a refreshingly simple, intuitive interface tailored to service-based small businesses and solopreneurs who bill by the hour.
Users highlight the ability to create professional-looking invoices in seconds, set up automated payment reminders, facilitate online client payments, and streamline expense tracking. FreshBooks also seamlessly handles taxes, reporting requirements, and form generation based on business type and location. These billing-centric features alleviate administrative tasks to help users focus on their core expertise.
Compare this to desktop accounting systems with clunky interfaces or generic DIY accounting tools lacking customization, and FreshBooks comes out ahead for freelancers, agencies, consultants, designers and other client-service professionals.
Wave: Leading the Charge with a Free Model
Wave Accounting stands out by offering its financial management platform entirely free for up to 9 users. This disruptive model makes robust accounting software accessible even to the most budget-constrained startups and smallest businesses. Users highlight Wave's impressive depth in tracking income, expenses, accounts payable/receivable, invoicing, monthly reporting, and payroll.
Beyond accounting, Wave also features seamless integrations with payment processing, email marketing, receipt scanning, and eCommerce platforms - all for free. Users can upgrade to paid plans to unlock features like automated bank feeds, custom reports builder, multi-currency support etc. But Wave's free offering alone rivals paid solutions of other players. The no-fee access to such comprehensive tools helps set Wave apart.
Zoho Books: Affordable Efficiency
Zoho Books stands out for providing an extensive feature set at an affordable price. Beyond basic accounting capabilities, Zoho automates critical business workflows around inventory, order fulfillment, purchasing, customer portals, and POS system integration. This helps streamline operations and increase productivity.
Users highlight Zoho Books' project management and time tracking features like schedules, tasks, and timesheets to keep projects on time and on budget. Tight CRM integration provides sales pipeline visibility and strengthens customer relationships through smarter communication tools. Zoho also offers users the ability to set security controls, access permissions, 2FA policies and other protections to safeguard sensitive data. These enterprise-grade capabilities offered at a fraction of the cost sets Zoho Books apart from the competition.
Selecting the Best Cloud Accounting Software for Your Small Business
With so many excellent cloud accounting platforms to choose from, it can be challenging to select the right solution for your small business. Here are some of the key factors to consider during your evaluation process.
Assessing User Access and Permissions
Carefully evaluate how many users in your organization need access to the accounting software. Many solutions provide tiered pricing plans based on the number of users. For example, QuickBooks Online has a "Simple Start" plan for 1 user that costs $25/month. Their "Plus" plan for up to 5 users costs $70/month. Understanding your user count will help compare plans apples-to-apples during product selection.
You'll also want to examine the permission levels and roles available in the system. For instance, a full admin user has unrestricted access to all data and configuration options. But you may want basic data entry users or read-only users for specific employees. The various permission types can directly impact access costs. So choose your desired permission schemes wisely.
Identifying Crucial Accounting Features
Make a list of the accounting modules and capabilities vital to your finance and accounting team. Every small business has unique requirements - give thoughtful consideration to the features you rely on daily vs. those that are "nice to have."
For example, if you send high volumes of invoices and receive frequent payments, you'll want a robust invoicing and accounts receivable system with strong payment processing integrations. Or if managing inventory is crucial for your distribution business, seek inventory management functions like tracking stock items, setting reorder points, and synchronizing data with ecommerce channels.
Identify the 5-10 non-negotiable accounting features upfront to evaluate competing software options. This will help you zero in on platforms purpose-built for your priorities.
Integration Capabilities: The Power of Connected Software
Today's cloud-based accounting platforms tout their ability to connect with other best-of-breed business applications through integrations. Before selecting solutions for your tech stack, research the integration capabilities of accounting systems on your shortlist.
Many offer native connections with POS systems, ecommerce stores, payroll providers, and business analytics tools. These deep integrations go beyond basic data syncing by allowing specialized platforms to communicate freely. Transactions flow seamlessly between systems without manual duplication of efforts.
For software lacking native integrations, services like Zapier make it easy to build custom connections between hundreds of applications. This flexibility helps you adapt the platforms to the unique needs of your small business.
Planning for Business Growth: Scalable Solutions
As you evaluate accounting software, think 3-5 years down the road about the future growth planned for your small business. If aggressive hiring goals are on the horizon or major expansion into new markets, you want scalable accounting software capable of growing alongside your needs.
Watch for solutions ideal for specific business stages. For example, a newer small business may benefit most from an all-in-one accounting/ERP platform like Sage or SAP Business One. But larger or mid-market businesses often opt for specialized accounting software integrated with separate ERP, HCM, and CRM systems.
Reviewing long-term expansion initiatives makes it easier to choose sustainable solutions, minimizing business disruptions from switching platforms. Investing in scalable accounting software also keeps pace with new innovations so your capabilities evolve automatically over time.
Transitioning to Cloud-Based Accounting
Migrating accounting systems can be daunting, but with proper planning it can be a smooth process. Here are some tips for transitioning existing accounting data and workflows to a new cloud-based platform.
Migrating from Desktop to Cloud: A Step-by-Step Guide
The first step is to export all necessary data from your current desktop accounting software. This typically includes:
- Chart of accounts
- Customers and vendors
- Open invoices and bills
- Historical transaction details
- Item lists
- Tax rates
Most desktop accounting platforms allow exporting lists and transactions to Excel or CSV files. Ensure your exported data is well-organized and that sensitive information is properly secured.
Uploading Data to Your New Cloud Accounting Platform
Once data is exported, navigate to the import tool in your selected cloud accounting platform. Carefully follow upload instructions, mapping desktop chart of accounts, lists, and transaction data to the appropriate sections.
Take time validating initial uploads to catch any formatting issues early. Most cloud platforms allow re-uploading if needed.
Verifying Data Accuracy Post-Migration
After upload, meticulously review your newly migrated data. Double check account balances, open invoices, transaction details, and verify key lists contain all required entries.
It can be tedious, but vital to catch inconsistencies between your desktop vs cloud accounting books early before errors compound. Address any discrepancies immediately to maintain data integrity.
Addressing Migration Issues and Data Cleanup
Despite best efforts, you may encounter migration issues like formatting errors that fail to import data properly. Additionally, you may want to correct historical data to utilize new features in your cloud accounting platform.
Work with platform support and accounting specialists to fix faulty imported data and optimize data capture moving forward. Use platform tools to correct historical records, input missing info, and ensure accuracy as you turn the page to cloud financial management.
With attention to detail during planning and execution, switching to cloud accounting can revolutionize how you manage finances without losing existing business data. Leverage all capabilities cloud platforms provide for efficient, scalable accounting operations.
Summing Up: Our Top Accounting Software Picks
Based on ease of use, affordability, and scalability, we recommend Xero as the best cloud accounting platform for most small businesses today. Xero provides an intuitive interface along with robust reporting and integration capabilities, making it a great choice for small business owners looking to effectively manage their finances in the cloud.
Key benefits of Xero include:
- Easy to use even for those without an accounting background
- Affordable pricing starts at just $9 per month
- Scales as your business grows with plans for any sized operation
- Mobile access from anywhere via iOS and Android apps
- Integration with many business platforms and applications
- Automatic bank feeds and reconciliation
- Customizable reports and financial dashboards
While Xero is our top overall pick, QuickBooks Online and FreshBooks are also excellent options depending on your business’ specific needs. We suggest evaluating free trials of these leading solutions to determine which platform best matches your requirements.
Regardless of which accounting software you select, transitioning financial management to an intuitive, cloud-based solution can save time and provide real-time visibility into the fiscal health of your business.
