This guide defines online accounting software as an accounting program accessed through an internet browser and designed to service thousands of businesses at once. (This is called multi-tenanted software where the businesses are “tenants” sharing the same big apartment block, or program.)

Cloud accounting sometimes also refers to hosted and hybrid software. Hosted accounting software is a desktop accounting program operated by a software company from its own data centre which businesses access through an internet browser.

This gives a business the power of a desktop program within the flexibility of a browser. However, hosted software also tends to miss out on the latest features such as online invoicing or the ability to integrate with the full range of online business software

A hybrid program is desktop application which saves the data file to the software company’s data center. Its advantages include the responsiveness and speed of a desktop application and the ability to work without an internet connection. It can also enjoy the advantages of online accounting software; however it can’t be viewed on tablets or mobile devices or non-PCs such as Macs and Chrome books.

Hybrid and hosted software use a dated graphical and experiential design that is more suited to accountants and power users rather than business owners.

Once multi-tenanted online software replicates all the more powerful functions of desktop software, and internet coverage has improved in reliability and speed, the need for alternative models will disappear.

What’s so great about online software?

Digital First is unashamedly in favour of online accounting software over desktop accounting software for several reasons.

The most important is this: We are witnessing an explosion of business software which is harnessing the power of the internet to drive a huge leap in productivity. All this innovation is happening almost exclusively with online software.

Business owners who have can embrace this world of new software will find they have the latest technology at their fingertips. And they will be able to run their operations from any smartphone, tablet or device with an internet connection.

It is important to note upfront that a reliable internet connection is mandatory. Online business software won’t work on a plane (without WiFi) or if your internet connection is unusably slow or temperamental.

Although this guide is focused on the topic of online accounting software, many themes apply to online business software in general.

This guide (indeed, the mission of Digital First) is aimed at encouraging you to use business software better.

What’s wrong with sticking with Excel?

Many business owners type their receipts and sales into a spreadsheet. After all, Excel is virtually free because almost everyone uses Microsoft Office. This is fine for keeping track of a hobby or a one-off business activity.

Accounting software is a major improvement over spreadsheets for one main reason. Instead of a historical record only seen by the taxation office, a business owner can use accounting software as a tool to review and improve the performance of their business.

Desktop accounting software could already do this but the lack of usability meant that its full potential was often wasted. Online accounting software is changing this situation.

Ref: http://www.digitalfirst.com/online-accounting-guide/