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.

Simply put, cloud computing is computing based on the internet. Where in the past, people would run applications or programs from software downloaded on a physical computer or server in their building, cloud computing allows people access the same kinds of applications through the internet. It is a solution growing in popularity, especially amongst SMEs. The CRN predicts that by 2014, small businesses will spend almost $100 billion on cloud computing services.