The difference between cloud accounting and traditional accounting software is that since cloud accounting is remotely hosted, you and your team can access your files from anywhere rather than being obligated to work in the office. Cloud accounting collaboration is easier because of convenient multi-user access, and you’ll have less of the paper clutter that comes with traditional accounting software use. You’ve likely heard it from software providers or those providing advice to small businesses. But what is a “cloud solution,” and is it the right accounting process for your workplace?

With this information, you can start making informed decisions about the future of your accounting. However, the best option and price point will depend on the specific capabilities and features you are looking for. Our user review score is the average user review score reported by Capterra and G2. Other review sites might be used if a score from Capterra or G2 is unavailable. So, even if your laptop gets stolen, no one will be able to access the data without your password as the data has no contact with any hardware.

Pricing & Other Deciding Factors

QuickBooks also automatically backs up your data in the cloud, so if any of your devices are lost, damaged or stolen, you can still access your QuickBooks account from any computer, tablet or mobile device with an internet connection. You can also control who accesses your data, and what they can see and do with it by assigning different permission levels to limit the access privileges of each user. Invite your accountant, bookkeeper, or employees to work in the cloud so your team is on the same digital page. With a few clicks, you can create secure access privileges and change user access at any time.

When it comes to the cost of traditional accounting software, you are responsible for maintaining your servers, increasing your storage capacity through investing in new servers, and updating your software. Traditional accounting software requires you to have a dedicated hard drive where you will install the software and store your financial data. However, as your business expands, you will want your accounting software with inventory management, that can manage vendors and assist you with purchase ordering when selling more products.

FreshBooks

Many cloud accounting software limits inventory management to more expensive, higher-tier plans, so be prepared to pay extra for this feature. If your clients and customers expect you to drive your own car or pay for items out of pocket, then getting reimbursements through expense and mileage tracking is a must. Most cloud accounting software includes this feature in some capacity, though some impose limits on lower tier plans or require a paid add-on for things like mobile receipt capture. The best cloud accounting software should make it easy to pick an invoice template, customize it to your needs and send it to your clients.

Best Cloud Accounting Software Of 2025

You can receive automated bank feeds into your accounting software and connect to other business apps for greater efficiency. You can also collaborate with other people, like accountants and bookkeepers, by giving them access to view and share your figures. Xero regularly backs up your data and protects it with multiple layers of security. I recommend FreshBooks for sole proprietors and freelancers because of its strong time tracking and invoicing features. It has a built-in time tracker, and it’s easy to add time entries to your invoices when billing clients. Since only one seat is allowed in each subscription (unless you pay for additional seats), it’s ideal for freelancers or business owners who don’t require collaboration with multiple team members.

The cloud refers to a vast global network of servers accessed over the internet and the software and databases that run on those servers. Improves efficiency by automating traditional accounting tasks such as automatically updating financial information and providing real-time financial reporting. Access Xero features for 30 days, then decide which plan best suits your business.

Select the ideal contact record template for customers and vendors, and the software will display totals to date for revenue and expenses, a list of recent invoices, estimates, and recurring profiles. For your small business, you can track all the assets and liabilities, track business and personal transactions separately, and store contracts, receipts, leases, and other documents. Zoho Books offers a free plan for businesses with revenue of under 50K per annum. Connect your bank feeds and eliminate manual data entry and simplify payment acceptances with automatic reconciliation.

How to choose a cloud accounting software

You can import data from another accounting system in bulk via CSV files once you’ve done the initial set up in Xero. That includes the chart of accounts, invoices, bills, contacts and fixed assets. For a smooth transition and best results, we recommend working with an accountant or bookkeeper, preferably one with Xero experience, when you make the move to Xero cloud accounting software. Xero is a great option for businesses with multiple users, especially those needing excellent inventory management features. Unlike most similar software, you can add as many seats as needed for free in all its plans.

• Cloud solutions use the same type of security used to make financial data and online banking safe.
• I evaluated basic financial reports (such as a balance sheet, income statement, and general ledger) and common management reports (like A/R and A/P aging).
• Advanced features include double entry, payroll integration, project cost tracking, customisation options and the ability to collaborate with an accountant.
• You can be confident that you have an up-to-date picture of how your business is doing, no matter where you are.

Cloud technology is redefining financial management by offering businesses flexibility and agility in handling their operations. Cloud-based platforms enable companies to access financial data from anywhere, facilitating collaboration and real-time decision-making. Financial managers can analyze up-to-date cash flow statements or balance sheets, supporting responsive financial planning and strategy development. This is especially advantageous for multinational corporations, which can synchronize financial operations across cloud accounting time zones and regions without requiring extensive infrastructure. You can connect payment apps to your cloud accounting software allowing you to pay and be paid automatically.

We’re backing small business

FreshBooks is an intuitive, easy-to-use accounting software designed for small business owners who do not have an accounting background. It allows users to easily create invoices, manage projects, track expenses, track time, track loans and file tax. Xero Accounting offers a user-friendly interface that is easy to learn, even if you’ve never used accounting software before.

Cloud accounting software offers greater access, efficiency, accuracy, scalability and security compared to traditional accounting software. Fortunately, many cloud accounting software platforms charge you month-to-month, so you’re not locked into an annual contract if you do change your mind and decide that you need to switch later on. Besides pricing, there are many different features to consider when trying to decide on the best cloud accounting software for your needs. An intuitive program that gives you access to a simple dashboard that displays charts to provide an overview of the current state of your company’s finances, automatic features and easy-to-use mobile apps are best. The vertical integration of compatible apps with software has already become a normal part of cloud-based software systems.

The mobile app works with Xero accounting software to help you run your small business from anywhere. Keep track of your unpaid and overdue invoices, bank account balances, profit and loss, cash flow, and bills to pay. The mobile app is free with every subscription, and is compatible with iOS and Android. FreshBooks was originally engineered as an invoice creation and tracking project to help small businesses get paid faster. Nearly 20 years after its creation, the accounting software still focuses on helping business owners get paid quickly and accurately.