Business accounting

Today, don’t even think about doing your books in a hand-written ledger or creating a custom spreadsheet to track your accounting transactions.

And did you ever hear of the old “shoebox” method of business accounting? A technique used in the dark ages before inexpensive accounting software was developed. Throughout each year many small business owners stuffed all their receipts in a shoebox. Then, shortly before the annual tax deadline, they’d empty the shoebox on their living room floors and sort the receipts into stacks -- one stack for rent, another for utilities, etc. Then, to get totals for their tax forms, they’d add up each stack’s receipts on their adding machine, or maybe even by hand -- gasp! Banish the shoebox method from your mind -- this is the 21st Century!

Business accounting software

Just get an accounting software program for small business and set it up on your computer. (Or, if you have a bunch of employees entering transactions, get a license for multiple computers.) Now many formerly laborious tasks can be accomplished in little time.

These programs come in options with different levels of features. But they should all print your checks, categorize transactions, automatically deal with recurring transactions, create your financial statements, set up budgets and do tons of other things, some specific to your industry or location, such as tracking billable hours or working at Point of Sale (POS). Unfortunately they can not yet pour you a fresh latte while they’re updating your balance sheet, paying your vendors and reconciling your bank account, but they’re probably working on adding that feature.

How it works

Business accounting software gives you a friendly, familiar looking front end on your computer screen to work with. For example, typically when you or an assistant “writes” a check, the input window looks like a real check, and when you view your bank transaction list, it looks like your check register.

Selecting which accounting software to purchase

If you are already working with an accountant and are ready to set up new books or switch brands, ask your tax pro what they recommend. Ideally you’d use a program their office is adequately familiar with and that their other clients haven’t reported nasty problems with.

If your tax pro’s office suggests a brand they themselves use that is so specialized that they would have to the inputting for you, ask them to suggest something else. You want to use a commonly available brand that is user-friendly enough that any reasonably intelligent person -- such as you -- can use without special training.

There are many brands and programs out there, but for the typical small company we recommend these as the industry leaders in their platforms:

QuickBooks® for PCs

QuickBooks has become the de facto standard for small business accounting software for the PC. The big enchilada, so prevalent that other options are hardly seen or heard. So, if your small business uses the PC platform, get QuickBooks.

Intuit has sent IdeaCafe review copies of QuickBooks for the PC for years and although each year’s version adds more bells, whistles and possibilities, they actually get even easier to use.

The reason we suggest QuickBooks over its cheaper, shorter sibling, Quicken®, is that QuickBooks can better expand with your business. If you start with Quicken, you might outgrow it, then have to switch to QuickBooks. So why not start out with what you’ll end up with?

Your CPA’s office probably does not use QuickBooks themselves -- they use sophisticated software specialized for accountants -- but they are familiar with it since so many of their clients use it. If you encounter a QuickBooks mystery you can’t solve, they may be able to help you or refer you to help .

Your local Small Business Development Center (SBDC) may offer classes in using QuickBooks if you don’t want to tackle it totally seat-of-the-pants.

It would be good to ask your tax pro which version of QuickBooks your company should select. QuickBooks offers specific versions for specific industries and other specific needs, but your accountant may prefer you choose a more generic version with less behind-the-scenes stuff built-in, so you could more easily tailor it yourself.

If you think your company is too big for QuickBooks

If your company is large or has more specialized or sophisticated needs than you see available in QuickBooks Pro or Premier, there are certainly many options. First examine QuickBooks' Enterprise Solutions, which are currently available for these industries: contracting, manufacturing, nonprofit, professional services, retail and wholesale. Ask your CPA if one of these would be a good fit for your company or if you should develop a Request for Proposal to send to other vendors who offer large-scale solutions.

Whatever you do, try hard to find existing software that offers modules to fit your special needs. Today there is so much proven accounting software available that you shouldn’t need to even contemplate having a programmer custom-develop something for you from scratch. When you go the custom route, you are forever dependent on the programmer. If he or she becomes unavailable or their software company undergoes changes, your company may find it almost impossible -- or at least very time-consuming and expensive -- to add new features or get a glitch fixed.

MYOB Account Edge® for Apple® Macintosh

Intuit, the maker of QuickBooks ignored the Mac platform for many years, then they finally came out with a Mac update in 2004. But it appears they lost too much ground in the interim. In our testing, QuickBooks’ Mac product had serious flaws: it corrupted our test files beyond repair and their tech support had no solution.

So Mac users, if you really want to use QuickBooks, we strongly recommend you step over to a PC to do so. Although you hate that thought, here is an advantage to it -- your accountant can take a copy of your PC file as-is and add accountant’s journal entries to it, then return it to you updated.

If you want to do your business accounting on your Mac, the dominant, popular program is MYOB (Mind Your Own Business). It is as easy and friendly as you expect of Mac programs. However, be warned that your CPA will not be familiar with it, but she should be able to find her way around since MYOB will provide her office a free PC-version so she can add her accountant’s notes to your file.

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