Bookkeeping is a time-consuming job. It is a challenge to maintain books systematically while handling and managing overall office tasks. However technology has come to the rescue! Online accounting is a fast growing way used by small businesses to take care of their accounting needs. Online accounting has two components- online accounting software and a remote bookkeeper. While you can have one and not the other, it makes a lot of sense to have both the software and the bookkeeper remote!
Broadly there are two key ways-hosted and ASP based. In the hosted method, the software is hosted on the software company's servers or third-party servers. They hold the licenses of the software. The underlying software is still a desktop based one. It is just housed in their servers. In an ASP or online base method, the underlying software has been specially designed for online access. For e.g. QuickBooks and Peachtree also have an online accounting platform which have been designed specially for being accessed remotely.
The benefits of online accounting and bookkeeping are as follows:
oLow start-up cost: You don't need to buy the software or worry about data back-ups. All you need is a PC with good internet access
oNo worries about system upgrades and checks
oFully integrated service-online accounting service providers can handle all the activities from your accounting to personal /small business taxes
oYou can actually afford to have a full-time dedicated accountant as the costs for such services are 50% lower than your local hiring costs
oMany online bookkeeping solutions also offer an add-on data back-up package that includes a regular/daily back-up of your critical data
oMany sites offer a document management solution too! So you can keep scanned images in their secure servers for easy access in future. Imagine having a break-in in your office and the computers get stolen!
oOnline accounting services are especially ideal for start-ups and early-stage small businesses that want to minimize non-critical investments and don't have the time or resources for back-office functions.
However working in an online medium (software or service provider) does require getting used to as the bookkeeper is physically not present before you. But technology has also made communication cheaper and available through multiple medium- phone, chat, email, online meeting tools or project management software. So after a while, you don't miss the physical presence of the bookkeeper or the software.
It is important to understand one's complete accounting requirements before deciding on an online software package. Most current online packages don't handle inventory well or complicated sales processes (with estimates and sales orders) well. They are also not suitable if you carry a large range of SKUs/items, as the invoicing features are designed towards handling simpler sales/vendor invoices.
However, you can also still opt for an online service provider with a hosted package to give you best of both the worlds!
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