Expats running businesses or tracking investments while struggling with new Costa Rican taxes and accounting rules may find some freedom in the cloud. The cloud represents powerful computing resources delivered to customers as a service. By using hardware and software via a connection to the Internet, users can tap applications once only available to the few with money to buy them.
A good example is accounting software for business and investment. In the recent past, good software was expensive to buy and maintain. Most accounting software companies have moved to a yearly fee to get upgrades. The cost of yearly maintenance plans is usually a percentage of the purchase price of new software. If one does not keep the software up-to-date, it is quickly outdated.
Xero, a company from New Zealand and another called Freshbooks in the United States lead the world with their innovative solutions to online accounting. There are also other companies following the single-ledger model who provide excellent services as well. QuickBooks Online, the firm called Xero, Wave Accounting, and Zoho Books were the pick of the cloud bunch in a recent study.
Single-ledger refers to having one set of books in the cloud accessible by all the users connected to the system. The accounting to run a business, track investments, and prepare tax returns is all in the ledger.
New U.S. tax laws have battered expats. Some of them have given up and gone home, others have had to hire extra accounting staff to keep up with the changes. One big problem is having up-to-date data available for decisions while having accountants post transactions and file reports. This is true for those trying to manage their Costa Rican homes, rental properties, or businesses.
Most online software does not work well in a multi-currency environment like Costa Rica because only limited multi-currency functionality is available. Expats using software-as-a-service in Costa Rica need a comprehensive accounting package which includes strong multi-currency capability.
Most people know QuickBooks accounting software as the de facto standard in the United States and Canada. Market share ranges from 80 to 90 percent depending on the study consulted. Many people are dumping their desktop version in the United States and Canada for QuickBooks Online. What most people do not know is there is an online version for the global marketplace. This software is very strong in multi-currency, it is available in 45 languages, used in 130 countries, and has 500 different available tax customizations.
For expats trying to tame their accounting and tax reporting obligations in Costa Rica and their home country, QuickBooks Online Global is probably the best option on the Internet today. This statement comes only after a thorough comparison of cloud accounting software that meets Costa Rican standards for accounting and reporting.
Now for the caveat: Most accountants in Costa Rica are not familiar with doing accounting in the cloud. One exception is a certified public accountant, Kevin Chavarria Obando. Recently, he implemented hosting of QuickBooks desktop software in the cloud to assist an international forestry company with their accounting. This method is more expensive than using the global online version, but it gives a bigger company more control over its books. In an interview, he said, “Online accounting is the future available now. Costa Ricans and foreigners need to better understand its benefits and cost savings.”
Not convinced? This is how to investigate. First, go to any Web site offering software-as-a-service accounting and download a free trial. Most companies offer 30 days to evaluate software. Accounting in Costa Rica must be in colons, the local currency, so multi-currency is a requirement. Set up a simple chart of accounts and input some make believe transactions for vendors, customers, and payroll. Access the test company from various locations to experience the online benefits. Invite another user, for example an accountant, and get an opinion.
Most options offer 256-bit SSL encryption or better so data is secure. SSL mean secure sockets layer. It is a standard security technology for establishing a link between a server and a client. Avoid software that does not meet this minimum standard.
For expats, cloud accounting could provide some additional freedom. Most packages have access via Apple devices like iPads, iPhones, and even iPods. Most platforms also support Android. This means, bookkeepers and accountants can be inputting information at one location, and the same information can be reviewed in another simultaneously. Once approved, producing reports and filing taxes is a breeze.
There are many benefits to using cloud services. There are many different offerings. Accounting is only one of them. Expats who travel, investors, and business people can be more efficient, productive, and effective by learning more about what is available.