What's cloud accounting?


1st June, 2021

Cloud accounting 101: What is it and who can benefit by using it?

Cloud accounting may sound like more tech-industry jargon, but the concept behind it has caused huge and overwhelmingly positive impacts for business owners over the past decade.

Also known as ‘online accounting’, cloud accounting generally makes managing your finances and tax affairs easier, faster and safer for business owners.

What is ‘the cloud’?

When someone mentions ‘the cloud’, they’re referring to a network of remote servers hosted online that store, manage, and process data in place of local servers or personal computers.

Just like Netflix, which made a name for itself as the brand that made TV shows and movies available in the cloud, MYOB specialises in developing accounting tools that can also be accessed, and used, online.

Cloud technology is making services from movies to bookkeeping and accounting available anywhere, anytime.

Ryan Lazanis, CPA, who recently published a list of the 131 best cloud accounting software apps from around the world (which includes MYOB), had this to say about cloud accounting:

“When I ran my accounting firm, our whole value proposition was centered around making our clients’ lives easy and pain-free,” said Lazanis.

“Cloud accounting played a massive role in helping to achieve this. You just can’t beat anywhere, anytime access to your data and the automation benefits of eliminating tedious, time-consuming tasks.

“Cloud accounting was a game-changer for my clients.”

Here’s a brief FAQ to help you understand cloud accounting software better.

What is cloud accounting?

Cloud accounting, or online accounting, is using the internet to access, use and store accounting software and data, rather than physically installing it in a computer.

You might install the software on your computer (but this is becoming less common), and it runs on remote servers, so you can access it with an internet connection.

In some instances, you won’t need to install the software on your computer and can access it via web browsers. This is becoming the more common scenario.

READ: 7 ways online accounting can improve cashflow

What are the benefits of cloud accounting?

Cloud-based accounting software offers a number of benefits for businesses.

1. Storing and managing data

It alleviates the need for businesses to store and manage data, or maintain expensive computer hardware.

2. Low-cost

In some cases, all you need is a mobile device with internet connectivity, making cloud accounting far cheaper than desktop-based solutions.

3. Flexibility

The information can be updated and accessed from any computer anywhere in the world, offering true flexibility in a highly-connected world.

4. Minimises errors

There’s only one ledger kept and that’s your file in the cloud, which improves the accuracy of the informationand therefore minimises errors at BAS and tax time.

5. Interact in real time

Ledger owners can interact with their tax agent in real time instead of having to collate information and send the data file manually on a regular basis.

6. Up to date

The software is automatically kept up-to-date by the provider, meaning you don’t need to download updates such as new tax rates where the payroll module is used.

MYOB provides cloud accounting solutions

An increasing number of businesses, especially new and startup businesses, are choosing to use cloud-based accounting software such as MYOB Business to process their day-to-day transactions, manage cashflow and also keep track of purchases and payments.

MYOB Business is suitable for:

  • Small businesses with simple accounting needs
  • People new to accounting or accounting software
  • Businesses that need to transition from manual record-keeping

What about the security of cloud accounting?

Any discussion of cloud technology inevitably brings up concerns regarding security and data privacy, as people quickly realise they’re no longer ‘owning’ their data (and sometimes, their customers’ data).

Being aware of these security concerns is particularly important today, as we see data breach after data breach impacting the world’s biggest brands and their customers’ privacy.

The good news? Your cloud accounting software provider is responsible for this. MYOB spends significant time and resources making certain that their servers maintain a higher level of security and integrity than its customers could maintain of their own accord.

Features like two-factor authentication, among others, are examples of how the security of data held online continues to evolve.

What does cloud accounting mean for your accountant or tax agent?

Accountants, bookkeepers and tax agents are comfortable with recommending cloud accounting to their clients, except when extenuating circumstances prevent them from doing so.

Not only do they recognise the benefits online accounting offers your business, they reap the rewards themselves.

Cloud accounting for bookkeepers

For bookkeepers, cloud accounting means faster documentation, less time spent doing data entry and more time spent offering advice on how business owners can reduce costs or improve their systems.

Cloud accounting for accountants

For accountants, cloud accounting means a more efficient compliance workflow, reducing the chance of duplication or other errors, and the ability to spend more time advising their clients on how to maintain and grow their business.

To give you a practical example, accountants who have clients using MYOB Business can easily log in to their online files come tax time. They can process end-of-year adjustments, which get updated in real time, with no major interruptions to the clients.

Throughout this process, there’s no need to send files back and forth, or verify figures from various sources; it all happens automatically.

Another benefit of using the cloud for advisors is they can review clients’ operating results at any time (including in April or May each year for tax-planning purposes) and provide proactive, timely advice on issues impacting their business (such as falling margins or a looming super payment). This adds more value to the advisor’s service offering by helping to keep the business on track and comply with tax obligations.

Find out more about how a business management platform with online accounting can make your business life easier.