What is cloud computing? Benefits for small businesses

Published Wednesday 5 November 2025

Table of contents

• What is cloud computing?
• Benefits of cloud computing
• Types of cloud computing
• Examples of cloud computing for small businesses
• Getting started with cloud computing
• FAQs on cloud computing

Key takeaways

• Start small with cloud computing by implementing one tool first, such as cloud storage or online invoicing, to test how it works for your business before moving all operations to the cloud.

• Prioritize cloud solutions that offer automatic backups and enterprise-grade security to protect your business data more effectively than traditional on-premise storage while reducing IT maintenance costs.

• Utilize cloud computing's accessibility features to work from any location and device, enabling you to check account balances, update records, and collaborate with team members outside normal office hours.

• Research cloud-based software that can export data in tax-compliant formats, as authorities often specify requirements for saving and storing business records for auditing purposes.

What is cloud computing?

Cloud computing stores your data, files, and software on remote servers accessible via the internet. This means you can access your business information from any device, anywhere, at any time.

Key benefits include:

• Accessibility: Work from any location with internet access
• Flexibility: Switch between devices without losing data
• Collaboration: Share information instantly with team members
• Automatic updates: Software stays current without manual installation

Benefits of cloud computing

Cloud computing offers significant advantages for small businesses looking to improve efficiency and reduce costs. Here are the key benefits:

Cost savings

• lower upfront costs as you do not need to buy expensive hardware or software
• predictable pricing with monthly subscriptions instead of large capital investments
• reduced IT costs because you do not need dedicated IT staff or maintenance

Improved accessibility

• Work from anywhere: Access your business data from any location
• Multi-device support: Use computers, tablets, or smartphones seamlessly
• 24/7 availability: Your data is available whenever you need it

Enhanced security

• Professional protection:Enterprise-grade security without the enterprise cost
• Automatic backups: Your data is continuously protected
• Disaster recovery: Quick recovery from hardware failures or natural disasters

Types of cloud computing

Cloud computing comes in different forms to suit various business needs. Understanding these options helps you choose the right solution.

Deployment models

• Public cloud: Shared infrastructure managed by providers like Google or Microsoft
• Private cloud: Dedicated infrastructure for your business only
• Hybrid cloud: Combination of public and private cloud solutions

Service types

• software as a service (SaaS): ready-to-use applications like email or accounting software
• platform as a service (PaaS): development platforms for building custom applications
• infrastructure as a service (IaaS): virtual servers and storage for technical teams

Examples of cloud computing for small businesses

Cloud computing is already part of many business operations you might use daily. Here are common examples:

Communication and collaboration

• use email services such as Gmail and Outlook 365
• share files with Dropbox or Google Drive
• hold video conferences with Zoom or Microsoft Teams

Business management

• : Xero, QuickBooks Online
• Customer management: Salesforce, HubSpot
• Project management: Asana, Trello

E-commerce and marketing

• set up an online store with Shopify or WooCommerce
• manage social media with Hootsuite or Buffer
• run email marketing campaigns with Mailchimp or Constant Contact

Getting started with cloud computing

Moving to the cloud doesn’t have to be complicated. Here are a few simple steps to get you started.

1. Identify your needs: Think about which parts of your business could be more efficient. Are you spending too much time on invoicing, bookkeeping, or communicating with your team?
2. Research your options: Look for cloud-based software that solves your specific problems and can export data in compliant formats, as tax authorities often specify the best format for saving and storing data for auditing purposes.
3. Start small: You don’t have to move everything at once. Try one tool first, like a cloud storage service or an online invoicing platform, to see how it works for you.
4. Talk to an advisor: An accountant or bookkeeper who is familiar with cloud tools can give you great advice on what will work best for your business.

Cloud computing eliminates location barriers for your business operations. Instead of being tied to your office computer, you can access your business data from anywhere with internet access.

Real-world benefits

• check account balances and make payments while travelling
• order supplies from anywhere using your mobile device
• update financial records outside office hours
• share files with team members instantly

Technical advantages

• avoid hardware maintenance as cloud providers handle technical support
• benefit from automatic backups to keep your data protected
• work from computers, tablets, or smartphones for device flexibility
• see changes sync instantly across all devices with real-time updates

Cloud computing makes it easier to run your business from anywhere. With Xero accounting software, you can access your financial information in real time, collaborate with your team, and focus on growing your business.

Start a free trial of Xero accounting software to see how cloud accounting can simplify your business finances.

FAQs on cloud computing

Common cloud computing concerns often hold small businesses back from making the switch. Here are the facts about the most frequently asked questions.

Is cloud computing just the internet?

No. You use the internet to connect to the cloud, but the cloud refers to remote servers that store and process your data.

Can you lose data in the cloud?

Your data is often safer in the cloud than on your computer. This helps you meet legal obligations, as official business records must be kept for at least seven years. Cloud providers invest heavily in security systems and backup infrastructure that most small businesses cannot afford.

Is the cloud only an Apple product?

No. While Apple offers iCloud, many companies provide cloud services including Google, Dropbox, Microsoft, and Xero.

What happens if the internet goes down?

If you lose internet access, your data stays safe in the cloud. You can access it again as soon as you are back online.

Is cloud computing expensive?

Cloud computing is often cheaper because you only pay for what you use. You avoid costs for hardware, maintenance, upgrades, and IT support.

Do you lose control of your data?

You gain more control over your data. You can access it from anywhere, at any time, on any device. You decide who can access your data and can change permissions instantly.