Well cloud accounting is really a mash up of two ideas and has been gaining quite a lot of traction and interest in recent years. Many small businesses are now turning to online applications to handle their business accounting needs.

Firstly accounting software, that is any computer application that helps you with any form of accounting procedure. This can be as simple as a small sales ledger app all the way to an enterprise level full accounting package.

The second concept is cloud computing. Wikipedia list cloud computing as “Cloud computing is Internet-based computing, whereby shared resources, software, and information are provided to computers and other devices on demand, like the electricity grid.”

So cloud accounting software is basically a way to run your small business accounts entirely online without the need for offline storage or applications. So there is no native install on your own computer and you can access your accounts from anywhere with an Internet connection. This even means accessing your accounting data via your smart phone such as iPhone or Blackberry.

Many people believe that ‘cloud accounting’ will entirely replace locally installed copies of accounting software in the not too distant future. The reasons behind this can be summarized as improved data access and sharing and faster and cheaper software development. The advantages of cloud accounting are not limited to either small or big businesses but can apply to both.

It is always important to remember if you are thinking of choosing accounting software applications what the level of data security is, how easily can you export your data to another platform and of course always consider price and ease of use as factors in making your decision.