Accounting technology / Glossary / Cloud accounting

What is cloud accounting?

Definition

Cloud accounting is keeping a company's books in a ledger run as a web service and paid by subscription, rather than in software installed on its own computers. Bank feeds, invoicing and reporting update in real time, and the accountant and the client work in the same books.

Also calledonline accountingcloud bookkeeping

Compare the softwareBest cloud accounting software →All 22 bookkeeping and accounting vendors →

Largest platforms: QuickBooks Online, Xero
Category: Bookkeeping
Vendors profiled: 22

How cloud accounting works

Xero and QuickBooks Online made it the default for small businesses from the late 2000s; today almost all new accounting systems are cloud-only, including the AI-native ERPs. The remaining on-premise base is in larger companies on older ERP versions and in firms with desktop tax and accounts production software. For accounting firms the cloud model changed the business: shared ledgers, app marketplaces, and practice tools built around the client's live data.

Common questions

What is the difference between cloud and on-premise accounting software?+

Cloud software runs on the vendor's servers and is accessed through a browser; on-premise software is installed and maintained on the company's own hardware. Cloud is updated continuously and priced per month; on-premise is licensed and upgraded in versions.

Is cloud accounting software secure?+

The major platforms hold security certifications and run on the same infrastructure as banks; the practical risk is weak passwords and access control on the customer's side rather than the vendor's.

Which cloud accounting software do accountants use?+

QuickBooks Online and Xero dominate small business; Sage, FreeAgent and Zoho Books follow; NetSuite and Sage Intacct serve the mid-market.