Cloud based accounting software is a natural extension of the online world that businesses operate in. Two of the major players in the market are QuickBooks Online and Xero. FreshBooks and Kashoo are two additional systems that have many benefits as well. Regardless of the brand,the major advantages of a cloud based software over traditional desktop versions is that financials can be accessed anywhere that an internet connection is available. Multiple users can access the file simultaneously, updates and backups are automatic and direct connection to online banking and payment options are available. From the perspective of a Certified Public Accountant, online accounting can improve the tax preparation and planning process due to its ease of use, accessibility and instant data sharing CPAs and client.
QuickBooks Online is one of the primary online accounting software options for small businesses and is the option the majority of our clients are using. It maintains most of the functions that QuickBooks desktop uses, which makes it an attractive upgrade option for users currently using the desktop version. Users should be aware however, that navigating the software can be difficult if they are used to the desktop version. Several features are not yet provided in the online version, but it provides the necessary accounting functions of double entry, reconciling and reporting capabilities to accomplish most small business needs. Invoice automation, bill pay, payroll and tracking inventory are some of the features available on the online version if users are willing to pay for the premium versions. Like the QuickBooks desktop version,a minimum level of accounting knowledge is still required to operate this software properly. This is one area that QuickBooks Online’s major competitor, Xero hopes to improve upon.
Xero is marketed as “beautiful accounting software” and its goal is to be a small business friendly software solution that users actually enjoy using. Xero customer support will help with the conversion over to their system and set up is a step-by-step, intuitive process that the software walks you through. The software focuses on the use of banking and credit card account import processes to drive all the accounting. Bank accounts are automatically reconciled and journal entries are not required. Xero has partnered with financial providers such as ADP, Bill.com, FreshBooks and PayPal to name a few so there are a lot of options for add-ons.The company is in the process of rolling out payroll functions as well, but inventory management is still unavailable. The other major limitation of Xero is that it is a New Zealand based company that has adapted its product for use in the United States. The company is still working out some issues of adapting the software to United States methods of accounting. However, they pride themselves on being responsive to requests from users and getting updates to the software as soon as possible.
As referenced above,accounting systems like Xero are creating alliances with other programs to provide customizable options to meet business needs. FreshBooks is a common resource we see businesses using for invoicing. It is easy to use and creates professional invoices that can be sent via regular or electronic mail. FreshBooks can accept electronic payment via PayPal and Authorize.net which also makes it an attractive option for business seeking to speed up their receivables. The reporting functions for receivables can help businesses plan for cash flow expectations and data can be imported or exported easily. The major issue with Freshbooks is that it advertises itself as an accounting software, but it is does not have double entry accounting which is necessary to create accurate financials. We recommend utilizing FreshBooks in conjunction with an accounting software that supports double entry, as opposed to as a standalone system.
The last software we have seen clients exploring is Kashoo. It is the accounting software for small businesses that have the most basic accounting needs. It can perform functions like its competitors with multiple user access, double entry accounting and banking and credit card downloading. The negatives of the software are that readily available technical support is not easily obtained like with QuickBooks Online and Xero, inventory management can be difficult and cash basis accounting is not currently available. Kashoo reports can only be run on an accrual basis which is limiting for most small businesses that are on a cash basis for tax reporting.
These are just several of the cloud based accounting systems on the market and can be customized to meet almost any business’ accounting needs. All of the mentioned software programs offer a free trial period so our suggestion is to try them out! Practice with and explore the different functions that are available with each. For the major competitors we also have professional resources that can provide training so reach out to us if you are considering making a change. Moving to the cloud is just another step in making accounting for your business easy and useful to becoming successful business owners!