Online Bookkeeping – What it is, how it works, the pros & the cons

What is online bookkeeping?

Online bookkeeping aka: cloud bookkeeping/accounting is no longer a trend in the bookkeeping industry but the new norm.
It is a web based bookkeeping system for businesses and individuals where the bookkeeping is encrypted and managed online rather than on the business owner’s desktop, laptop, or network.
Business owners and individuals access their online bookkeeping system via the internet.

The business owner and the online bookkeeping vendor are two of the main players in an online bookkeeping system.

rents the system from the online bookkeeping vendor by way of a monthly/annual subscription. IE: QuickBooks Online (QBO)
accesses their online bookkeeping system via the internet by going to the vendor website and logging into their account.
does their bookkeeping online through the website.

has the responsibility and risk to maintain, manage and secure “the system” and data.
“the system” – is the accounting software (incl. software updates), the storage & processing servers (computers), the security (incl. data backups) and the 24-hour easy access.
has the responsibility and incentive, via insurance companies, to create and maintain the processes to keep your data secure with regular data backups, system maintenance, strong privacy measures and continuous improvement.

Mobility – anytime, anywhere from any device (dependent on internet access)
Multiple person access at one time for most modules (depends on subscription level).
Automate, streamline, and optimize the way you want & need.
Faster and more accurate basic data entry.
At a glance dashboards for a quick glimpse at various sections of your business
Updates to software, taxes, or bug fixes so you are always using the most current version of the software.
No downtime updating, installing, configuring, and maintaining networks, servers, security software and hardware for accounting programs.
Scalable – as your company grows you can upgrade and add to your accounting system.
Customizable – integrate 3rd party apps to add value in any area of your business.
Standard reports to check your numbers quickly.
Access to great technical support via phone, email, text, or chat.

Everyone works together on the same live data file. The need to back up, transfer and re-import the company data file into a desktop accounting software is eliminated.
Getting help from your accountant or bookkeeper is easier than ever because they can access your live file at any time to access the right information to give you an informed answer.
Increased problem solving because collaboration is easier.
On the go invoicing allows you to prepare & send accurate invoices while the information is fresh in your mind.
Data syncing reduces the need for riskier manual data entry.

Loss of data is reduced because data is stored on large corporation computers that have better security and higher quality hardware.
No one can access your data unless you give them your login details or give them their own access which means if your iPhone, computer, or whatever device you are using to access your data is stolen, it is very difficult for unauthorized people to access your data.
User authentication methods are in place to ensure you have permission to access the file you are trying to open. (It can actually be quite annoying at times!)
Levels of access are available to give you control and set individual access permissions.

Streamline your workflow by syncing your bank and credit card transactions.
Optimize the data sync by creating rules to tell the program how to deal with certain transactions. For example, you can tell the program to put all Tim Horton’s transactions into the Meals & Entertainment expense account.
Send set invoices automatically using schedules.

If your internet connection is down or slow, you either cannot access your data or your productivity is slow – trying to get anything done when your connection is slow is actually more frustrating than if the connection is down completely.
Need to purchase a third-party app to create your own physical backup.
Subscription based – if you do not pay your subscription, you lose access to your data and no other program can read it.
You must pay for 3rd party apps. (This increases the monthly expense but also increases the efficiency of how you run your company. The increased efficiency should outweigh the increase in cost.)
If the online vendor stores the data on servers outside of your home country, your company data is subject to the laws where the physical servers and data are stored. (At the time of this writing, QBO Canada stores your data in Canada.)

Get the 1-on-1 help you need to make your bookkeeping painless.

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