Cloud Computing

Friday, May 19, 2017

As the government is moving forward with its plans to implement Making Tax Digital (MTD) it is more important than ever to think about how you can stay up to date and compliant and cloud computing is arguably the easiest and most cost-effective way to ensure this. Below, we look into what cloud computing actually is, the pros and cons and its use for accountants.

What is cloud computing?

Cloud computing is the delivery of any computing service over the internet, or “the cloud”. These services range from software and storage to servers and databases and it’s likely that you’re using these services more often than you think. Most cloud computing services will charge users, normally on a monthly or yearly plan which is based on usage.

Here are a few definitions to get started with:

  • Server – a server is a computer program that provides functionality and services to other computer programs or devices. A server will accept a request and respond to it. Some servers are ‘dedicated’, this means that they only carry out one function such as hosting a website. Servers are nearly always needed around the clock and must be reliable so they are usually high-performance computers that are never turned off.
  • Software – software is the programs and applications that run on a computer; as opposed to hardware which is the physical components of a computer. Software and hardware are related. Software tells the hardware what to do. Programs such as word processors and spreadsheets are software.
  • Database – a database is a set of data that is held in a computer. Databases make it easy to store and analyse vast amounts of information.
  • Storage – there are two types of storage used by a computer; a main store made up of ROM and RAM and a backup store which can be either internal or external.
    • The backup store can be either an internal hard disk or an external storage device such as a USB drive, CD, DVD, external hard drive or cloud storage. External storage has the advantage of being able to be held in a different location to the computer to ensure that a backup is safe in the event of a fire, flood, theft or other disastrous event.
    • Storage is measured in bits and bytes depending on the amount of information it contains. A bit is the smallest measurement followed by bytes and kilobytes then on through megabytes and gigabytes up to terabytes. A computer has a set amount of internal storage but this can be easily expanded with external storage devices.


What are the benefits of cloud computing?


The main advantage of cloud computing is the ease and security of automatic backups. Most cloud software automatically backs up documents every time a change is made. This means if there is a sudden power failure or a theft at your premises, everything is safely backed up and waiting for you.


Cloud providers take security very seriously. Access to your cloud account will be password protected and the information held is nearly always encrypted. Some cloud providers will insist on complex passwords and periodic password changes to ensure that your files and information are as safe as possible. Reputable providers employ top tech security experts to ensure the integrity of their software.


Cloud software normally comes as a whole package with help and support included with your subscription and updates are done automatically. This is a much cheaper alternative to employing IT support separately. Some cloud software is completely free and most have a free trial period so you can make sure you like the program before you have to pay anything. The payment plans are usually scalable so you only pay for what you need. There are normally discounts or plans for additional users as opposed to having to buy the entire package for each user as with traditional desktop software.


Cloud computing has almost unlimited storage so there is no need to worry about the capacity of your hard drive or bringing in external storage.


Once you are set up with cloud software, all you need to access your files and documents is a computer and internet access. Some cloud software providers have mobile apps available, meaning it’s even easier to access your profile anywhere and at any time.


Are there any drawbacks to cloud computing?

Technical Issues

Although these don’t happen very often, technical faults are a risk with cloud computing. If you are using a large, reputable company technical faults will be flagged and dealt with very quickly. There is also the issue of technical faults with your own network, if there are internet outages locally you will be unable to access your account.


You should be aware that in using any cloud computing software you are surrendering some details and information to the provider. To ensure privacy you should spend some time considering various cloud computing providers, read user reviews and choose one that suits all of your security needs. Most providers will utilise end-to-end encryption so that only you can see the information in your account. This means it is vital that you keep your login details and password safe and secure.


As with everything else that uses the internet, there is a risk of external threats and hacking. To mitigate this risk, you should use a reliable cloud provider and ensure that your own firewall and virus software is adequate and up-to-date.

Cloud accounting

Emails, document storage and music and TV streaming are all examples of cloud computing. In the context of accounting, cloud computing is most commonly used for:

  • Sending and receiving emails
  • Accessing and storing files and documents
  • Accessing accounting software
  • Hosting your practice website

There are a number of cloud accounting software providers. These all have standard basic features and then you can add features to tailor them to your specific needs. This makes recommending cloud accounting software very difficult as each provider has different features and different benefits depending on your needs and preferred methods of working. There are some helpful comparison tables online as well as user reviews to assist you in choosing the software that will work best for you.

Below is a list of things which you might want to consider when selecting the best software for you:

  • Interface and navigation – this will be the first thing that you see so you want something that appeals to you. The navigation should be easy and logical but sometimes it simply comes down to aesthetics – you prefer the look of one program over another.
  • Familiarity – if you are already using a desktop program and they have a cloud-based version available, switching to their online platform will be a much easier conversion process for you.
  • Cost – the price for different packages vary with each provider. Make sure that you choose a package that has all the features you need. If you have staff or other people who may need to access the software, make sure that the package you have chosen allows for multiple users. The pricing plans are usually on a sliding scale depending on number of users.
  • Mobile versions – some cloud accounting software is also available in an app that can be accessed on a smartphone or tablet. If this is important to you, double check that the software you have chosen has an app available and it is included in the payment plan. You should make sure you try out any apps beforehand as some have very limited features or a difficult user interface.
  • User support – if cloud computing is new to you then help and support are probably an important consideration. Some providers have excellent round-the-clock support available while others will only have support during office hours so think about what support you may need and check what help is available before you sign up.
  • Imports and exports – if you are switching to a cloud based platform then you will probably have a lot of data and information that needs to be imported. Make sure that the software you have chosen is compatible with file imports in the format that you have them. If you will also be exporting information from your cloud software, make sure you can do this too.

The best advice we can give is to do some research yourself into the various cloud accounting software available, read some genuine user reviews as well as expert reviews and take advantage of free trial periods before you settle on what works best for you.