Hosted, cloud solutions, or on-prem: What’s the best option for your tax firm?

Tax and accounting professionals just want their computers and software to work. However, before you can “just make it work,” it’s important to understand how you want to work: hosted, on premises or in the cloud.

It’s common to hear these phrases and not know what they actually mean. Taking a moment to break each of these terms down will help you make the best decision for your tax and accounting firm.

• Hosted: Your software and data are on third-party servers you access from an internet-connected device. You buy your software solution independently, and then add on the ability to access your software and data online.

• On premises, or on-prem: Your software and data are hosted on your server, network or locally on your computer’s desktop.

• Cloud: Applications in the cloud are web-enabled, meaning your software and data are accessible from any device with an internet connection. The software is constantly up to date, and you don’t have a physical copy of the software.

Which solution Is best?

Hosted solutions are excellent if you want to rely on the workflow of your current on-prem desktop software and the flexibility of the cloud. Your business may be adding clients or employees—and this growth comes at a cost. For example, employees have costs, including hardware, software licensing, and training. Hosted solutions allow you to mitigate IT costs through monthly subscriptions, potentially helping you reduce your dependency on a costly server for storage or other IT maintenance. Aside from the flexibility you and your staff gain with anytime, anywhere access, you gain layers of security.

On the other hand, cloud solutions and hosted services are excellent for firms looking to move quickly, control costs, and help maintain the security of client data, while also helping ensure availability. As long as you have an internet connection, you have access to your software and data. One of the main benefits to a cloud solution is the freedom to work anywhere, any time.

Taking steps to secure your data, and more importantly, your clients’ data, can be a heavy cost as well. In today’s specialized economy, many businesses must be good stewards of their clients’ data. In cloud and hosted options, data is stored offsite and behind enhanced security to help ensure data security and making sensitive information less vulnerable to attack.

With the expectation of availability in today’s ultra-mobile and always-at-work environment, limiting your employees’ ability to work while outside the office does not make sense. In addition, clients need to see what you are doing in real time to help them achieve their goals. The need for reliably available data is achieved through redundancies. Both cloud and hosted solutions should have this built in.

Editor’s note: Check out hosting options for Intuit® Lacerte® Tax or ProSeries® Tax to see if hosting is right for your current desktop software solution. This article was originally published Sept. 17, 2019, and updated with new content on March 28, 2022.