6 reasons why cloud accounting reduces risks and builds efficiency

“Data is King” is a catchphrase to describe the importance of customer information in today’s digital world. With that in mind, it’s vital to protect your data. Switching to cloud bookkeeping is a great way to reduce risks and ensure your business is safe.

When you do your accounting on a desktop computer, here are some of the risks you are taking:

  • A fire or flood at your office could knock out all your computers – and your financial data
  • Vital information could be hacked or stolen
  • Your computers or servers may crash, resulting in data loss
  • A business shutdown (such as a pandemic or a storm) may leave you without access to your data if you have to work from home

Let’s take a look at cloud bookkeeping for small- and medium-sized companies in Canada and see how it can help you lower risk and run your business more efficiently.

How does cloud accounting work?

There are two options for small- and medium-sized business bookkeeping in Canada:

  1. Desktop: You and your team enter your invoices, payments and other customer data in accounting software at your office. Several computers may be linked in a network so that more than one employee can use the system at one time.
  2. Cloud bookkeeping: Software programs such as Xero are browser-based. You can enter and view information anywhere in the world where there is an internet connection – at home, at a business meeting or even on vacation in Bali. Authorized users can include fellow employees and your accounting firm.

Is cloud accounting secure?

Absolutely. If you are worried about security, be sure to choose a program with two-factor authentication. This requires that, in addition to entering a password, you must enter a secret code sent to your phone. This ensures that hackers cannot access your valuable data.

Cloud-based software is always up to date

One of the limitations of desktop software is that you may still be working on the version from 2019. Cloud software is automatically updated – so you don’t even notice the changes. If you are doing your own company payroll, you always have the latest Canadian government rates for deducting income tax, Canada Pension Plan, Employment Insurance and more.

Delivering flexibility as your business grows

As your firm expands, you may want additional employees to have access to your bookkeeping software to create invoices, manage accounts payable and analyze management reports. With cloud accounting software, it’s easy to add users.

Deal with your accountant via the cloud

Your business may work with an external accounting firm to generate monthly reports and to file year-end corporate income tax returns. With desktop software, you must create a backup file and send it to your accountant via email or Dropbox. When anyone makes changes to the file, they need to inform the others. On the other hand, cloud accounting software lets your accountant create reports and adjusting entries instantly – updating your data for all parties.

Build efficiency with cloud tools

With desktop software, you create an invoice. Then you have to open your email system, write an email to your client and attach the invoice. Cloud bookkeeping programs like Xero allow you to prepare an invoice and send it immediately with a single click. If you do a lot of invoicing, this could save your team a lot of time every day. Further, tools like HubDoc gather your financial documents and eliminate manual data entry. HubDoc integrates directly with your cloud bookkeeping program.

Automatic integration of payroll data

Many small and medium-sized companies are outsourcing their payroll. This takes a vital but time-consuming task off your hands, ensures accuracy, and eliminates the risk of being dinged by the CRA for late or erroneous remittances.

Cloud payroll software such as WagePoint automates your payroll, and the data is entered into cloud accounting software programs like Xero. WagePoint has a time-tracking feature that reduces management time spent on monitoring employee hours. With cloud software like Xero, your payroll data automatically integrates with your company bookkeeping file. In that way, as soon as your employees are paid, your bank balance is updated, and your books reflect the transaction.

Learn more about how cloud accounting automated payroll can help you stay out of trouble with the Canada Revenue Agency.

Pay bills quickly and easily

As with invoicing, accounts payable can be handled quickly. Some businesses are still going to their online banking and paying bills there. Believe it or not, we continue to receive the occasional paper cheque with snail mail – talk about time-consuming!

Plooto is a cloud accounting program that helps you to pay bills and manage payables efficiently. You simply click to pay invoices. Plooto integrates automatically with Xero cloud accounting software.

You can save even more time by scheduling automated payments for regular bills and CRA remittances. That way, you don’t have to worry about missing a CRA deadline and being hit by interest and penalties.

So why isn’t every business in Canada using cloud bookkeeping?

With all these advantages, shouldn’t all small and medium-sized companies in Canada adopt cloud accounting software like Xero? Let’s have a look at three questions that may be holding you back:

  1. Risks of cloud storage: Yes, there have been some highly publicized hacks of the cloud, especially of the private photos of celebrities. However, the cloud is much safer than storing your data on a computer or server at your office.
  2. Fear of change: If you are currently running bookkeeping software on your server or desktop, you may be wondering, “Why switch?” But it’s important not to wait for a crisis before moving to a more secure and flexible model.
  3. Too busy to make the switch: You probably have a lot on your plate, from making sales to managing employees to supervising production. Nevertheless, you’d be surprised at how little time is needed to shift to cloud bookkeeping.

Yes, it’s time for your business to consider cloud accounting. At Bronte Bay, we’re here to help. We invite you to schedule a 20-minute call so that we can learn more about your business and discuss how this change could benefit you. Please get in touch with us at info@brontebay.com

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