This Insights was contributed by Lauren McKenzie, CPA (N.C. License Number 36563), an associate at Adam Shay CPA, PLLC.
In today’s world there are plenty of stress-inducing burdens facing entrepreneurs: generating positive cash flow, maintaining a strong client base, identifying a unique position in the consumer market, and the list goes on. Maintaining accurate accounting records should not be one of those burdens. Our CPA firm recommends finding relief from that burden by using a cloud accounting solution.
First and foremost, we encourage accounting records to be maintained in accounting software, whether traditional or cloud-based. The cloud component of cloud accounting is what differentiates it from traditional accounting software. The cloud stores data in a secure, remote location that can be updated or reviewed at any time. It enables business owners to access real-time information from almost any device at any location with an Internet connection. Merging the benefits of the cloud and accounting software can provide immediate and long-lasting benefits to a business owner.
The first of those benefits is upfront cost. Cloud accounting software providers (QuickBooks Online and Xero, for instance) typically offer a monthly subscription with varying levels of services based on a company’s needs. Payroll, credit card payment processing, inventory tracking, multiple users and disaster recovery plans all affect the subscription cost. What our clients enjoy about the cost is that it is typically spread out over time, upgrades are free and instantaneous, and data is automatically backed up to the cloud for no additional fee. Another cost benefit is that many clients have been able to self-manage their bookkeeping needs due to the user-friendly nature of cloud accounting software. However, we recommend this be assessed on a company-by-company basis. Hiring a qualified professional to outsource bookkeeping allows the business owner to focus on his or her strategy and passions.
Cloud accounting software not only saves money, but it also saves time. The system can be accessed anywhere so in the event of office closings (anyone remember the ice storm of 2014?) there is no loss in ability to bill customers, record invoices, or monitor cash flow. Bank account transactions are automatically pulled in and recurring entries can be memorized to drastically reduce time spent on manual entry. In the event of a computer crash, the data is stored safely on an external server. Or worse, in the event of a stolen computer, accounting data is secure since the user’s login and password are required to access the records. As CPAs, it allows us instant access for tax preparation, planning and troubleshooting any accounting issues that arise during the year. There is only one data file that multiple users can access, so there is no waiting for files to be returned or manual adjustments to be made for the financial data to be current and accurate. The level of access can also be customized to avoid data manipulation by the various authorized users.
The most important benefit is that it adds value. All too often we see business owners who are only getting updates on their company’s financial position monthly, quarterly or even yearly when they come to us for tax preparation. Cloud accounting software provides real-time information on the company’s profitability to owners, CPAs, bankers and other advisers. This can be crucial not only for tax preparation, but obtaining financing, monitoring performance metrics, and tracking goals.
We also recognize that cloud accounting has limitations. There are still features that traditional accounting software has that cloud accounting software does not. The good news is that competition in the market drives better products. There is significant funding and a large market for online accounting software, and improvements are sure to follow. Cloud accounting is not for every business and we are proponents of using remote-access cloud technology as well. The best approach is to work with a professional to analyze a business’ specific situation, and the time to act is now. Either establishing a new accounting system or backtracking to compile 2015 data needs to be done by the end of the year to reduce the burden come tax season. We believe maintaining an accurate and current financial record is one of the best business practices to have. Cloud accounting is a solution worth exploring to save businesses money and time and increase the value of accounting records.
Lauren McKenzie, CPA (N.C. License Number 36563), is an associate at Adam Shay CPA, PLLC. She focuses on assisting business owners and individuals in tax preparation and planning. Her goal is to empower business owners and individuals by increasing knowledge about taxes and what they can do to minimize them where possible. For more information, visit http://www.wilmingtontaxesandaccounting.com/ or email her at [email protected]. She can also be reached by phone at 910-256-3456.
Adam Shay, CPA (NC License Number 35961), MBA, is managing partner of Adam Shay CPA, PLLC. He focuses on minimizing taxes and improving the financial results of entrepreneurs, and is actively involved in supporting the Wilmington entrepreneurial and startup community. For more information, visit http://www.wilmingtontaxesandaccounting.com/ or email him at [email protected]. He can also be reached by phone at 910-256-3456.
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