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What is online accounting; The Pros and Cons

With pandemic making the world go cashless, it is inevitable that every service will find its way into the digital arena. Be it restaurants, clothing brands, marketing firms, or even accounting, every business is making their way online.

When it comes to businesses as crucial as accountancy, one gets rather skeptical if it is risky. Many people still do not know what online accounting is actually about and how it works. If you are one of those people then you have come to the right place. In this article we will cover the essentials you need to know about online accounting.

So let’s get started:

What is online accounting?

Accounting online entails getting your firm’s accounting done through an accountancy firm online or virtually. Gone are the days when you had to have an accountant physically present in your office in order to chat with them about a small thing.  

All you need to do is get a reliable accountancy firm, sign an official deal with them for managing your company’s accounting in-person and you are good. Once you are satisfied with how the things going to run between you and the accounting firm you just hired, you won’t have to ever meet them physically again (unless you want to). Every task will be handled using a cloud system, be it flow of information, board meeting, etc.

It is safe to assume that all of the accounting firms have cloud based systems these days. Most of their workforce is operating from home (out of the offices) while maintaining their standard quality services. Many of these accounting firms have developed their own cloud system to get the features that are going to facilitate them as well as their clients at best.

From tax returns, business transactions, to payrolls, everything is done through this cloud based system. There are a number of accountancy practice software available as well. Many accounting firms can use them instead of developing their own if they want.

The Good

When it comes to counting the benefits, the list is exhausting. Let’s explain a few of the most convincing ones:

Saves you time and money

Without any doubt, online is easier on your pocket and saves a good deal of time. With the conventional accounting, if you are getting your accountancy handled by a firm then setting up a meeting with them by either sending one of your employees to meet with them or asking one of their managers to visit for a short discussion can be quite nerve wrecking. You are not the only client they are managing so getting a good time slot can be a tough nut to crack. With online accounting, you do not have to rely on hardcopy of record files as everything is being handled through software that you get complete access to. You can easily go through the record and find files you need to review without having to wait for them to send it to you.

 Meetings or discussions can be done virtually and with the looming pandemic, we all know that is the best way for every type of meeting these days. The virtual option for all your accountancy tasks will save you plenty of trips and time. 

You get to hire the best accounting firm for the company

Since accountancy will completely be digital through a certain accountancy practice software, you will no longer be constrained by the location specification. For conventional or old school accounting, one has to take into account the distance between their firm and the accountancy’s they are going to take onboard.

That means the already limited choice between some of the best accounting firms would narrow down even more. Accounting related tasks are time-sensitive and one can never take the risk of having to wait for longer periods of time to review a file or go through the tax returns.

But with accounting online, everything becomes very convenient. You can literally choose an accounting firm based in another continent as long as they are willing to provide you their services. Do not compromise on the quality of service your business needs for managing the finances and get the best there is in the market for you.

Less confusing, more transparent

One of the many benefits online accounting has introduced includes the single ledger system. This system comprises a single record file for all the finances that the accounting firm as well as the client has access to.

This means that there is only going to be one file managed by both the parties. At times, using the conventional double ledger system, discrepancies may arise between the accounting firm’s copy of data and the client’s. This could be due to a plethora of reasons including a slower workflow that delays the update on the information or miscommunication, error in copying information, etc.

To avoid all the confusion, online accounting has brought us a system that is also more transparent. Whatever changes or updates are made on the accounting firm’s part are visible to the client. If there is miscommunication or error on the former’s part, the latter is immediately updated and swift action can be taken before it is too late.

Easy to use

While many of the people are still skeptical about its handling, we would still reiterate how simple and easy online accounting makes even the most critical of tasks. For those of you who are new to the system, it might take some time to get the hang of it but once you are past it, the rest becomes a piece of cake.

The system is pretty straightforward to begin with. Certain accounting firms design their own accountancy practice software to facilitate their clients even more. You can ask your accounting firm to explain the basics of software to you. A couple of your employees can even get training from them.

In order to get access to information, one does not need their desktop. You can use your smartphone as many of these systems have developed their apps that can be downloaded for swift access to information. You do not even have to worry about the safety of your data as the system is encrypted.

Free of the messy paperwork

Let us all admit our shared hatred for paperwork; nobody really likes it. Most of us are always trying to find ways to get out of it. That is exactly what online accounting vouches for; no paperwork. Apart from the legalities of the contract that you are going to have with the hired accounting firm, there will absolutely be no paperwork.

Everything is done using the cloud based system. The digital record is as legitimate as the paper one.  The information is safe and highly encrypted. With online accounting there will be no hard files to manage.

It becomes convenient to go over huge pieces of information on your phone or laptop then the conventional files. Finding the information you need is also easier through it. You can even share the information or any piece of data without much hassle when there’s a digital record instead of the paper one.

The bad

Not to sound biased towards it but there really are not many cons to it. a couple of the ones we could think of include:

Additional security

Whenever we digitize something as sensitive as accountancy, there is always a risk of phishing and other types of hacking attached to it. In order to get full encryption to avoid security breach of every kind, one needs to pay extra for it.

You ought to check the system the accounting firm uses before you can hand over your account to them. You can even install an additional system for securing the data on your end. While the conventional means of accounting also is at the risk of getting the information in the wrong hands, with online accounting you need to make sure that no third party can get access to your information flow.

Network requirement

Since it is the ‘online’ system we are talking about, internet connection is a prerequisite. In order to access the information, update anything, or review it you will need a stable internet connection.

While certain types of files or tasks can be viewed offline, the majority of the work done in the online accounting system needs an internet connection. If you can afford to outsource your accountancy, we can assume that having a stable internet connection should not be a problem for you.

Final words

Whether we like it or not, online accounting is surely something we all are going to eventually shift to. The process is easy to get the hang of, saves you from a lot of hassle and only requires additional security for smooth running. There are numerous renowned accounting firms providing services worldwide and we are sure you can find a perfect fit for your firm.

Until then, it’s a wrap from us!