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Risks of Hosting QuickBooks Files

Alison Garcia
Posted by Alison Garcia on Mar 15, 2021 8:00:00 AM

COVID-19 has invariably ushered in a new workplace culture, prompting many firms to go virtual instead of the traditional, in-person office setting. As businesses transition to virtual offices, you will need to put in place a reliable working model to collaborate with your team. How do you determine the best way to share your day-to-day files with your staff? How do you share QuickBooks desktop files between computers? Some options are to use a traditional hosted solution or the antiquated remote desktop route. In many cases, offices have turned to a hosted solution such as remote desktop or cloud hosting.

In this article, part one of a two-part series, we will discuss the risks of hosting QuickBooks files. In part two, we will discuss mitigating those risks.

However, if you are using QuickBooks Desktop as your accounting software, you will need to take special precautions and pay close attention to the details. QuickBooks Desktop functions on a unique database file format which is different from any other file type. Intuit, the maker of QuickBooks, does not recommend sharing QuickBooks company files via traditional file share options, so the alternative could be hosting. Although on the surface hosting may seem like the best option for you, peeling back the layers exposes critical risk factors. You need to consider them before committing to an expensive change. 


Security is the most important risk to consider. QuickBooks files can contain sensitive financial information related to your client's business. They can also contain personal data, such as social security numbers, unpublished revenue, etc., so you can’t run the risk of a security compromise. 

Data breaches or cyberattacks continued to increase in recent years. Cybercriminals thrive in the pandemic through phishing scams and social-engineering tactics, gaining access to users’ company or personal information. These malicious activities, if successful, can result in loss of data, and more importantly, your client’s trust.  

End-to-end encryption is the standard all banking institutions use, and it is key to securing your data. So be sure to seek it out when choosing the right technology partner. 

Data Loss 

Data loss can come from internal or external events. Internal examples include human errors, unauthorized access or system failures. External events are usually beyond your control and can include natural disasters, virus attacks or hardware failures. Both internal and external events that result in data loss can significantly hurt your business. 

Combat this risk by implementing regular backups so you always have a center to roll back to. This can prove to be very expensive with hosting solutions, as it essentially doubles the amount of cloud space needed. 


Who is ultimately responsible in the unfortunate event of a data breach? In most cases the buck stops with the tax professional, CPA or bookkeeper. With cloud hosting solutions, your client’s data is often left vulnerable because it lives in the cloud, not on your desktop. This also goes against the grain of QuickBooks Desktop. If sensitive information gets into the wrong hands, the client could hold you responsible for the fallout. 

Firms of all sizes need to minimize their liability. You cannot afford to let the adage “it could never happen to me” lull you into a false sense of security. The frequency of such an event may be low. But even a single incident could bleed into a significant financial payout and permanently dent your reputation. Either of these unwanted outcomes could be detrimental to your business. 

To overcome this risk, it’s good practice to include a release of liability in your engagement agreement. As an added layer of protection, consider solutions that have shared access from your desktop. It is a great alternative to a risky hosted solution. 

Accessibility and Latency 

When you access your file through a cloud-based server, there are several risks associated with accessibility and latency. The most common issue stems from your internet connection. At times when you experience slow internet speeds or a total outage, you will not be able to access your QuickBooks files. This can bring your productivity to a standstill if you can no longer work on the QuickBooks file. Slow or inconsistent internet connection can also result in latency. Latency is the delay of your actions and the server’s response to your action. If you’ve ever had an experience when you click on a link and it takes longer than usual to execute, you are experiencing latency. In addition to low productivity, it causes unwarranted frustration and stress. You need a solution that gives you real time access to all your QuickBooks company files regardless of internet connection speeds. 

Third Party Application Limitations 

If you are accustomed to relying on any third-party QuickBooks add-ons or supporting software that is critical to your workflow, that may change if you move to hosting. Most hosting providers limit what you can install on their servers. This is understandable as each additional piece of software on their servers poses a new risk of malware or poor performance. 

Hosting providers need to closely evaluate every new technology that will be running in their environment. A potentially harmful software installed by one user could impact the overall performance and security of other users on the same service. 

Chances are that you will no longer be able to use some of your favorite applications as you do today. Some hosting providers do allow you to work with their support team to install your desired software. But that could mean spending valuable time on the phone with support trying to install and configure your application. Time that can be better spent working on your client’s financials or building your business. 

In most cases, special software requests give the hosting provider the opportunity to slap you with an added fee. Or they try to upsell you the functionality to work with your favorite applications such as Microsoft Office, Adobe Acrobat, point-of-sale, CRM or bill pay applications. 

Click Here for part two, Mitigating Risks of Hosting QuickBooks Files

Topics: Desktop Accounting


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