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Accounting | Versus

Cloud vs Desktop Accounting Software

Published January 18, 2024

Published Jan 18, 2024

Tim Yoder, Ph.D., CPA

REVIEWED BY:
Tim Yoder, Ph.D., CPA

Danielle Bauter

WRITTEN BY:
Danielle Bauter

This article is part of a larger series on Accounting Software.

Table of Contents
  1. 1 Quick Comparison
  2. 2 Use Cases & Pros and Cons
  3. 3 Pricing
  4. 4 Considerations
  5. 5 FAQs
  6. 6 Bottom Line

Cloud and desktop accounting software are two types of accounting solutions that differ primarily in deployment and accessibility. The choice between cloud vs desktop accounting software depends on factors, such as the company’s size, structure, mobility requirements, and preferences for cost and control:

  • Cloud accounting software is more suitable for small businesses and those with remote teams
  • Desktop accounting software is better for larger enterprises with specific security or customization needs
 
Cloud Accounting Software
Desktop Accounting Software
Deployment
  • Hosted on remote servers
  • Users access through the internet using a web browser
  • Doesn’t require installation or maintenance
  • Installed and runs on a user’s local computer
  • All data and software files are stored on the user’s device
Accessibility
  • Users can access software and their financial data from any device with an internet connection
  • More flexible for remote work or collaboration
  • Access is limited to the specific device on which the software is installed
  • Remote access may require additional tools like virtual private networks (VPNs) or remote desktop solutions
Updates & Maintenance
  • Updates and maintenance are handled by the software provider on its servers
  • Users have access to latest features and improvements without needing to manually update the software
  • Maintenance tasks, such as data backups and security updates, are the user’s responsibility
  • Users are responsible for manually updating the software on their local machines
Collaboration & Sharing
  • Multiple users can collaborate in real time, as the data is stored centrally in the cloud
  • Facilitates sharing of information and collaboration among team members
  • Collaboration may involve sharing files or transferring data between devices
  • Real-time collaboration is often more challenging than with cloud-based solutions
Cost Structure
  • Typically follow a subscription-based model where users pay a regular fee for access to the software and services
  • Can be cost-effective for small businesses with lower upfront costs and scalability
  • Traditionally a one-time purchase of the software license, but many desktop accounting software providers are now requiring annual subscriptions
  • May have higher upfront costs but lower ongoing subscription fees
  • May incur additional costs for updates, support, or future versions
Security
  • Security measures are implemented by the service provider, including data encryption, regular backups, and access controls
  • Users rely on the provider’s security infrastructure
  • Security is the sole responsibility of the user
  • Users need to implement their own security measures, such as firewalls and antivirus software, to protect their data
Sharing With a Tax Preparer or Independent Accountant
  • In most cases, your tax preparer can be issued their own user ID so that they can access your account whenever needed
  • Sharing can be a manual and timely process, often requiring you to export your data and upload to a portal or send to your accountant

Use Cases and Pros & Cons

  • Businesses with remote users seeking real-time collaboration and access
  • Small businesses that work with remote accountants
  • Growing businesses that want a scalable accounting solution
  • Freelancers and small businesses that need easy access to invoicing and expense tracking
  • Businesses seeking integration with third-party apps and services
PROS CONS
Is accessible from anywhere with an internet connection May have limitations when it comes to customization
Allows multiple users, including accountants, tax preparers, and team members, to collaborate in real time Offers some services with limited offline functionality
Has automatic updates, including the latest features, security patches, and improvements Requires users to adapt to a new interface and workflow when transitioning from desktop platforms
Can scale easily to accommodate growing business needs Stores financial data on remote servers, which may raise concerns about data privacy
Check out our guide to the best cloud accounting software for our recommendations.
  • Businesses that require advanced features, such as inventory assembly management
  • Larger enterprises with security or customization needs
  • Businesses that operate in specialized industries, such as manufacturing or construction
  • Businesses with fixed office setups and consistent access to their desktop computers
  • Businesses seeking software that doesn’t require an internet connection to use
PROS CONS
Is not dependent on the internet; beneficial for users with unreliable or limited internet access Makes collaboration more challenging; multiple users may need to share files, leading to potential version control issues
Is sometimes sold as a one-time purchase license; can be more cost-effective than cloud May make it more difficult to scale up or adapt to changing business needs
May offer more flexibility for customization Comes with the risk of data loss in the event of a computer malfunction since data is stored locally
Offers users more direct control over how and when they update the software Has the potential to be outdated if it isn’t updated regularly
We suggest checking out our review of Sage 50 to learn more about a quality desktop program.

Pricing for Cloud vs Desktop Accounting

We looked at some popular accounting software providers to compare pricing, the number of users included, and accessibility. Please note that this pricing is as of Jan. 15, 2024.

Pricing
Number of Users Included
Accessibility
QuickBooks logo.
Plus
$90 monthly
5
Cloud
QuickBooks logo.
Advanced
$200 monthly
25
Cloud
Wave logo.
Free
Unlimited
Cloud
Sage 50 logo.
Pro
$58.92 monthly
1
Desktop
Sage 50 logo.
Premium
$96.58 to $222.25 monthly
5
Desktop
Sage 50 logo.
Quantum
$160 to $409.17 monthly
10
Desktop
NCH Express Accounting logo.
One-time payment of $129 to $159 (free for businesses with five or fewer employees)
1
Desktop

We included Wave and NCH Express Accounts, two of the solutions above, in our roundup of the best free accounting software. Check it out if you’re seeking free options.

Considerations for Cloud vs Desktop Accounting

There are many important factors to consider in your evaluation of cloud vs desktop accounting, including the following:

  • Size and structure: Consider the size and structure of your organization. Cloud software is often more scalable and suitable for businesses with remote teams. However, large businesses often require customization that is difficult to find in cloud accounting software.
  • Budget constraints: Assess budget constraints. Cloud solutions may have lower upfront costs, but subscription fees can accumulate over time.
  • Internet reliability: Consider the reliability of your internet connection. If internet connectivity is a concern, desktop accounting may be a more viable option.
  • Security requirements: Evaluate your security requirements. Cloud providers invest in security, but some businesses may have specific security or compliance needs that favor desktop solutions.
  • Collaboration needs: If real-time collaboration is crucial, a cloud solution might be more suitable for your business.
  • Adaptability to change: Consider how adaptable your organization is to change. Cloud solutions often involve a transition period and may require adjusting workflows.
  • External tax preparer or accountant: Sharing your books with an accounting professional outside your business is much easier with cloud accounting software than with desktop software.

Intuit will no longer be selling new subscriptions of QuickBooks Desktop Pro Plus and QuickBooks Desktop Premier Plus to United States customers after July 31, 2024. Existing subscribers will not be impacted by this change.

Frequently Asked Questions (FAQs)

The main difference lies in deployment and accessibility. Desktop accounting software is installed locally on a user’s computer, while cloud accounting software is hosted on remote servers and accessed through the internet.

Both cloud and desktop accounting can be secure, but the approach differs. Cloud providers invest in robust security measures while desktop security relies on user implementation. The choice depends on factors like data sensitivity and trust in the service provider.

Because a cloud accounting platform relies on a stable internet connection, if there are connectivity issues or if the internet goes down, users may experience disruptions in accessing their financial data. Users might also be restricted to the features and configurations offered by the service provider, which could be a drawback for businesses with unique or complex accounting needs.

Whether cloud accounting is better than desktop accounting depends on the specific needs, preferences, and circumstances of the user or organization. It is important to consider factors, such as price, accessibility, scalability, and data security, when making your decision. Cloud accounting is a better fit for users needing remote access to their books, scalability in their software, and integration with third-party apps.

Bottom Line

There is no one-size-fits-all answer to whether cloud vs desktop accounting software is better because it depends on the unique needs and preferences of your business. Before deciding, we recommend carefully evaluating the advantages and drawbacks of each option in your specific requirements, such as  budget and collaboration needs.

About the Author

Danielle Bauter

Find Danielle OnLinkedIn

Danielle Bauter

Danielle Bauter is a writer for the Accounting division of Fit Small Business. She has owned Check Yourself, a bookkeeping and payroll service that specializes in small business, for over twenty years. She holds a Bachelor's degree from UCLA and has served on the Board of the National Association of Women Business Owners. She also regularly writes about business for various consumer publications.