Traditional or online accounting?

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Salman Abdulrzazadeh – Leading specialist/accounting expert/trainer

What is accounting?

Accountant, accounting, and bookkeeping are words most of us have come across at least once. Among people who are not specialists in this field, questions often arise about what these terms actually mean. In modern times, another question has been added to these discussions: “What is online accounting?”

No matter how broad our imagination is, for many of us questions like “What is accounting?” or “How are accounting services provided?” always remain relevant. Along with these questions, online accounting, which is the combination of accounting and modern technology, has become a concept that attracts the attention of business owners, managers, and especially professionals working in the accounting field.

When we hear these words, many of us imagine serious-looking people working with large tables full of unclear numbers, sitting in offices piled high with documents.

People who work with documents and numbers and manage the financial affairs of companies and organizations are called accountants, and accounting is their field of work. Accountants provide accounting services to companies, organizations, and individual entrepreneurs.

So, what is accounting?
Accounting and bookkeeping are often used with the same meaning. Accounting includes both the theory and practice of record-keeping. Modern technology has moved accounting beyond the limits of a single office, made it global, and transferred it into the virtual world—this is how online accounting was formed.

Specialists sometimes answer the question “What is accounting?” by describing it as the business language used by well-organized and honest professionals known as accountants.

The definition given by the American Accounting Association is more academic. According to the association, accounting is the process of identifying, measuring, and communicating economic information so that users of this information can make informed judgments and decisions.

Accounting does not only record financial transactions. It also:

  • provides interested parties with information about a company’s financial position;

  • analyzes the data contained in documents called financial statements and prepares appropriate conclusions.

Today, accounting services are provided not only through traditional methods but also online.
So, what is online accounting?

From clay tablets to the cloud: What is online accounting?

The ancestors of modern accountants, known as record keepers, made their first accounting records by marking symbols on clay tablets. Questions such as “Who is an accountant?” or “How should accounting services be organized?” probably did not concern them, and the idea of “online accounting” would never have crossed their minds.

However, as human society developed, the accounting profession evolved as well. Along with answering the question “What is accounting?”, new terms such as “computerized accounting” entered our vocabulary. Today, technological progress allows accountants to manage their records “in the cloud” and prepare accounting reports online.

Here, we are talking about the cloud technology we often hear about. Cloud technology, or cloud computing, is a workspace allocated to you on the Internet—more precisely, on an external server. When using cloud computing, you do not rely on the software or hardware of your own devices (such as a computer, mobile phone, or tablet). Instead, you use the resources of an external server and can access various services, including accounting services.

This is similar to email. When you use an email service on a website (for example, gmail.com), you are using a cloud service, which is part of cloud technology.

So, what is cloud-based accounting, or online accounting?

Cloud accounting is a set of accounting software hosted on an external server and designed to be used over the Internet.

Order online accounting services, and have accounting always with you!

Accounting data, as well as the software needed to work with this data, is stored on servers located in special data centers designed for data storage and processing. In these centers, information is protected at the highest level against possible threats.

To work with accounting data, you do not need to purchase accounting software or install it on your computer. Instead, you rent the workspace required to manage your accounts, along with related services such as storage space, software, integration with different systems, and other tools—at affordable prices.

Cloud accounting services allow you to manage your accounting and work with reports even from the most remote parts of the world. A phone, tablet, or computer is enough for this purpose. The only requirement is a stable Internet connection.

If you are wondering, “What is online accounting or online bookkeeping?”, the answer has already been given above: cloud accounting is also called online accounting.

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Traditional or Online Accounting Services?

What is traditional accounting? It is the process of recording financial transactions manually on paper. In this type of accounting, accountants may keep records on the company’s own server or on office computers. They can also prepare financial statements and tax returns and submit them online.

Accounting services can also be provided through outsourcing.

At first glance, keeping accounting records on a company’s own server or employees’ computers may seem more convenient. In reality, before switching to online accounting, a number of issues must be addressed in traditional accounting:

  • hiring and training professional IT staff;

  • purchasing expensive equipment;

  • allocating office space for a local data center;

  • taking backup measures to prevent system failures (additional space, equipment, and similar needs);

  • ensuring both information security and physical security of the equipment;

  • regularly updating systems and software.

All of this requires significant time and resources and can be quite costly.

By using online accounting, these costs are transferred to the company that provides the cloud service. The freed-up funds can then be directed toward the core business activities.

Online accounting services also offer several advantages:

  • operations are faster;

  • the risk of data loss is lower;

  • costs are relatively lower;

  • calculations are more accurate.

Above, we have briefly tried to answer the questions “What is cloud or online accounting, and how does it differ from traditional accounting?”

In conclusion, online accounting services help businesses store all their data in one place, improve the organization of financial information, and increase data accessibility. All of this makes accounting data easier to use and manage.

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