9 Feb, 2024

Is Online Accounting Software Safe?

This article explores the benefits of cloud accounting software, how data security works with these platforms, and why running financial systems in the cloud now matches or exceeds on-premises security capabilities for many small businesses.

Cloud accounting software has become an increasingly popular option for small business owners looking to streamline their accounting and access their financial data anytime, anywhere. However, some wonder whether using the cloud for sensitive business data is truly safe and secure. This article will explore the benefits of cloud accounting software, how data security works with these web-based platforms, and why cloud accounting can take your business accounting to the next level while keeping your data safe?

Why Consider Using Cloud Accounting Software?

For small business owners and accounting teams, cloud accounting software offers some clear advantages over traditional, self-hosted accounting platforms. Cloud-based solutions give you and your team mobile access to your data from any device and location. They also provide automatic updates and backups of your data to external servers operated by your software provider. This protects you in case of computer crashes, natural disasters, or other crises that could cause data loss.

Additionally, cloud accounting systems scale with your business growth. As you add more customers, vendors, inventory, and transactions, the software flexibly expands to handle the increased workloads. Upgrade fees are minimal compared to purchasing new self-hosted accounting software licenses and servers. For these reasons, 63% of small business owners are projected to spend over $100 million on cloud apps in 2023.

Cloud Accounting Software vs. Self-Hosted Accounting Software

Discover why data security shouldn't be an obstacle to making a switch. Don't let the fear of data breaches hold you back from exploring new opportunities. With the right measures in place, you can safely and confidently make your move. It's useful to highlight a few differences between cloud-based and self-hosted accounting software:


  • Installed locally on office computers and servers
  • Your IT staff manages security, backups, upgrades
  • Access is limited to the office network
  • Upfront licensing model – additional fees to scale


  • Web-based access from any device
  • Cloud provider handles security and uptime
  • Encrypted remote access built-in
  • Subscription model – pay for what you use

For resource-constrained small businesses, trying to handle all hardware, software, security, backup, and update processes can become an unwieldy burden, especially as the company grows. Cloud solutions effectively outsource the bulk of this IT responsibility to specialized platform providers who can do it better and for less total cost.

How Secure is Your Financial Data in Cloud Accounting Software?

Data security is often a top concern for business owners considering switching to the cloud. However, modern cloud accounting platforms employ advanced security measures to keep your data safe. Leading solutions use high-grade encryption both at rest and in transit to prevent unauthorized access. Software providers also utilize strict, layered access controls over who can view and alter your financial records.

Moreover, web-based accounting systems benefit from the security resources of large cloud providers like Amazon Web Services, Microsoft Azure, and Google Cloud. These computing infrastructure giants invest billions in cutting-edge cloud security tools and teams of experts monitoring threats 24/7. Essentially, your data inherits these enterprise-level defenses by riding on their cloud networks.

For these reasons, research shows sensitive data is often safer in the cloud versus self-hosted servers, especially for small businesses lacking robust IT security teams and measures. Cloud accounting providers also handle backups, disaster recovery, infrastructure maintenance, and software upgrades for you, reducing the security risks of managing servers in-house.

Real-World Examples: Disaster Recovery Successes

Concerns around disaster recovery and business continuity are driving many accounting teams to adopt cloud-based financial systems. The experiences of companies who have lived through catastrophic data loss spotlight why having critical accounting data and applications in the cloud protects operations:

  • Texas DH Refrigeration saw its on-premises servers fried after Hurricane Harvey hit Houston in 2017. But with the help of cloud software, they resumed operations in days rather than the months it might have taken to procure new servers, reinstall software, and restore data backups from scratch.
  • Blue Granite Water Systems averted a devastating crisis after an employee accidentally wiped out two years of local accounting data right as they were preparing end-of-year financial reports. With cloud access, they quickly rolled back to cloud software to restore the deleted data in minutes.
  • Rosie Applications suffered an encrypted malware attack that locked down its local network and computers until a substantial ransom was paid. Cybersecurity specialists confirmed that affected desktop files were restored from backups without major downtime.

These real-world experiences spotlight that, however rigorous on-prem security may be, it is vulnerable to simple user errors, floods, fires, theft, hacks, and more. Cloud platforms offer redundancy, automated backup processes, quick failover capacity, and geographic diversity. Desktop software just cannot match cost-effectively.

What Questions Should You Ask Cloud Accounting Vendors About Security?

When evaluating cloud accounting platforms, ask vendors key questions about their security standards and protocols:

1. How is data encrypted? Look for 256-bit AES encryption or better in transit and at rest. Data should be unreadable without encryption keys if accessed without authorization.

2. What employee access controls are in place? Software companies should enforce strict permission levels and multifactor authentication for engineers to access your data. Audit logs should record access.

3. How are backups performed? Reputable software vendors will continuously back up your data to geographically separate data centers to prevent loss.

4. What disaster recovery provisions exist? Ask how quickly data can be restored from backups and what redundancy exists across data centers in case of outages.

5. Who provides the cloud infrastructure? Understanding which major cloud provider houses the accounting platform offers insight into security standards inherited.

6. How is security updated? Cloud accounting vendors should be continuously monitoring threats, updating to address vulnerabilities, enforcing data access rules, integrating new protocols like MFA, and more. Ask for specifics.

7. How is third-party access managed? If integrating with banks, payroll processors, sales channels, or other external services, strict APIs and data-sharing protocols should be outlined.

8. What compliance standards are followed? SOLC2, SOC3, ISO 27001, and PCI compliance signal security processes governing financial data are met.

Look for SOC 2 Compliance and Auditing

As you evaluate options, prioritize vendors that have invested in SOC 2 certification. SOC 2 attests an independent auditor has validated security, availability, confidentiality, and processing integrity controls are in place around handling customer data in the cloud.

Key Benefits of Cloud Accounting Software for Keeping Your Business Data Safe

Beyond trusting an individual software vendor's security claims, the cloud model itself empowers businesses to protect critical financial data better than on desktops or local networks:

1. Data Encryption

Cloud accounting software uses encryption techniques like TLS, SSL, HTTPS, and AES to secure data transfers and information at rest. Self-hosted software relies more on unencrypted protocols.

2. Access From Anywhere

Cloud platforms allow remote access from any device, enabling oversight of financials when traveling or working from home. Adding off-site access layers data protection.

3. Battling Security Threats

Cloud providers quickly deploy updates, patches, filters, and measures against malware, viruses, and ransomware attacks trying to seize local machines and servers.

4. Backup & Recovery

Cloud accounting platforms provide constant backups to prevent data loss from user errors or hardware failures. Easy point-in-time restores undo unwanted changes or data corruption.

5. Accounting Software Updates

Cloud accounting software deployment allows instant updates to be activated per user instead of IT-coordinated efforts to manually patch standalone machines. Updates address vulnerabilities.

6. Reducing Human Error Risks

Cloud platforms mitigate insider threats, as employees cannot as easily walk off with data on hard drives or inadvertently delete records. All activity logged.

7. Enhanced Authentication & Access Controls

Cloud administrators can enforce layered access permissions, temporary privileged credentials, and multifactor authentication across users far better than desktop tools.

8. Accounting Platform Resilience

Cloud accounting provides high availability across globally distributed data centers. On-premises software means a full outage if headquarters power or servers are disrupted.

For these technology and process control reasons, analysts widely recognize running financing systems in the cloud has now matched or outpaced on-premises security capabilities for many businesses.

Choosing the Best Cloud Accounting Software

While data shows that generic cloud hosting provides inherent security advantages over local servers, you still want confidence in your particular accounting platform. So, which solution ranks as today's top cloud accounting software?

Based on analyst reviews and leading surveys of small business owners, Jaz stands above competitors for capabilities, ease of use, mobility, and security standards. JAZ leverages Amazon Web Services' cloud infrastructure, inheriting world-class physical and network security. On the software side, Jaz employs end-to-end encryption, role-based access restrictions, expert monitoring teams, and data recovery provisions.

How You Can Keep Your Financial Data Safe and Secure?

  • AES 256-bit encryption of data in transit and at rest
  • Granular user permission presets like "Accounting Admin" and "Sales Rep" to control access
  • Activity logging to track all user actions within your company file
  • Video verification confirms user identities, adding new employees
  • Regular automated backups protect against data loss from user errors or disasters
  • 90-day backup history allows point-in-time data restores to undo unwanted changes
  • SOC 1/SSAE 16 & SOC 2 audited, ensuring financial information system security standards
  • ISO 27001 certification validating organizational information security best practices

On top of these technical controls, Jaz has robust accounting tools like Tax Profiles, Chart of Accounts, Double-entry Bookkeeping and 60+ other add-ons to simplify managing accounting. The platform scales from 1 to unlimited users, making it suitable for even fast-growing businesses.

Jaz empowers entrepreneurs to securely manage accounting from anywhere while leveraging the most trusted name in small business financial software.

Comparing Key Cloud-Based Accounting Software Solutions

Deciding between the various major cloud accounting platforms comes down to a few key factors - features, ease of use, mobility, integrations, and security. Here's a quick comparison of the top solutions:


  • Bank Reconciliation, payroll, AI Reconciliations, and more
  • Matching transactions and intelligent reconciliation
  • Financial Statements
  • Localized Tax Reports
  • Add-on
  • Electronic Filings
  • Add-on
  • Customized Reports
  • Customizable user permission presets
  • @Mentions & Comments
  • Activity Notifications
  • Activity Audit Logs
  • Internal Team Notes
  • Secure OTP Logins
  • Ownership Transfers
  • AI-powered Help Center


  • Account integrations
  • Photo importing for receipts
  • App Connecting opportunity
  • Role-based permissions

Sage Accounting

  • Schedule a demo to view security specifics
  • Bank feeds and rules for reconciliation
  • Set access by group or user
  • Available security whitepaper

Wave Financial

  • Daily remote backups
  • Private cloud network infrastructure
  • Custom user permission settings

Evaluating the detailed security specifics for your shortlist of accounting software vendors takes a little legwork by speaking with sales teams and sifting through documentation. And platforms continue advancing their monthly security feature sets. But in broad strokes, all major cloud accounting providers meet rigorous standards - especially on-premises tools.

Key Takeaways on Cloud Accounting Software Security

  • Cloud accounting systems employ rigorous encryption, access restrictions, and data protection your business may lack with desktop financial software.
  • Leading platforms leverage security standards and resources from major cloud infrastructure providers like AWS, Google Cloud, and Microsoft Azure.
  • Ask software vendors about encryption specifics, access controls, backup procedures, disaster recovery, and security update processes when evaluating options.
  • JAZ leads for security and accounting capabilities through Amazon Web Services hosting, granular user roles, activity logging, and automatic backup provisions.

By leveraging a top cloud accounting solution like Jaz, small businesses can safely migrate their financial data management to the cloud, collaborate across teams, avoid data loss, scale up security protocols, and access reports easily without compromising security. Cloud adoption continues to accelerate specifically because platform protections now match or exceed on-premises alternatives. So, small business owners can confidently turn to trusted cloud accounting systems to take their financial oversight and decision-making to the next level.

Streamline Your Business Finances With Jaz

Integrating seamlessly with popular bank feeds, payment processors, and other everyday business tools, Jaz centralizes all your key financial data for real-time reporting and insights. Built-in automation plus customizable workflows remove administrative headaches so you can focus on profitability.

Jaz is the all-in-one accounting solution built to simplify and automate your most complex accounting tasks like invoices, bills, bank reconciliations, payments, and more so you can get back to growing your business or serving more clients.

Get Started for free and take control of your financial operations with Jaz.

Frequently Asked Questions (FAQ)

1. What is cloud accounting software?

Cloud accounting software is a type of accounting system that is hosted on remote servers and accessed through the internet. It allows users to access their financial data and perform accounting tasks from any location with internet connectivity.

2. Is cloud accounting software safer than traditional accounting software?

In many cases, cloud accounting software offers better security features and data protection compared to traditional accounting software. With regular updates and strong encryption protocols, cloud accounting software is designed to provide a safe environment for managing financial information.

3. Are there any specific security measures in place to protect access to sensitive data in cloud accounting software?

Yes, reputable cloud accounting software providers implement access controls, encryption, and regular security updates to protect access to sensitive financial data. These measures help in preventing unauthorized access and maintaining the integrity of the data.

4. Can I migrate my existing financial data to a cloud accounting software?

Yes, most cloud accounting software allows for easy migration of existing financial data from traditional accounting systems. This process is typically facilitated through data import features and conversion tools provided by the cloud accounting software.

5. What are some key considerations for choosing a reliable cloud accounting software?

When selecting a cloud accounting software, it's important to consider factors such as data security features, ease of use, scalability, integration with other business systems, and the reputation of the provider in safeguarding financial data.