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Before computers became popular, a business owner kept track of his income and outgo via a system of ledgers, checkbooks, accounts, pads and pencils, often requiring several entries just to register the writing of a check or a simple deposit. As simple a task as reconciling the bank statement or writing payroll checks could take costly man hours and add dramatically to the costs of doing business.
In addition to that, if your business was one that had inventory or receivables, you often had to use the “accrual” method of accounting, a system of bookkeeping so complicated to do by hand that often even a small business would require a full-time bookkeeper. Now, however, that has all changed. With computer based bookkeeping, you can enter a check into the ledger in one place and it automatically makes all the other entries. Making a ledger entry or reconciling payroll is a matter of merely typing the numbers in, with all of the math being handled automatically by the computer. If your business is required to keep its books by the accrual method, then it is often a matter of entering the same data and telling the software to do the calculations. To say that it has changed the way businesses handle their books is an understatement. It has changed the way business is done. Almost any bookkeeping software will keep your ledger accounts, mange your checkbook, help you with payroll and prepare profit and loss statements or other financial reports you may want. In other words, they all perform the same basic functions, so making a decision about which software to get depends largely upon factors outside the software itself, such as your training needs, your hardware setup and which program is supported by your bank and preferred by your accountant.
It is no longer a matter of if you will use a computer to manage your accounts; these days the only question is which software program you will use. While simple bookkeeping requirements can be met by a simple spreadsheet on Microsoft Excel or OpenOffice Calc, most businesses use a variation of one of three software packages on the market. By far, the leader of the pack in both longevity and number of users is Intuit’s QuickBooks. It is the Business version of Intuit’s popular personal money management program Quicken and is widely supported and endorsed by both banks and accountants. In addition to all of the standard bookkeeping functions, there are two large selling points for QuickBooks; they are its scalability and integration. QuickBooks is very scalable, with a variety of packages ranging from the “Simple Start” package for the smallest of businesses to the full blown “QuickBooks Premier” version, capable of running the accounting needs for multi-million dollar businesses. One other big advantage that QuickBooks has is that many banks and brokerage houses are integrated into QuickBooks, being able to easily export your account records into QuickBooks format, thus saving you and your bookkeeper precious time. After QuickBooks, the next contender is Microsoft’s Small Business Accounting Software, which is nearly as well integrated with banks and financial houses as QuickBooks (often you will find if your bank does not support one, it supports the other) but does not scale as well for very large businesses, somewhat limiting your options as you grow. That being said, most average small businesses will not be affected by this limitation, and most businesses will appreciate its somewhat simpler interface and a more “Microsoft” feel. While not as popular with small businesses, Peachtree’s Complete Accounting is a serious contender. It is quite popular among larger businesses and because of this, has more of a “grown up” feel to it. It is not quite as intuitive as the other two, but is very powerful and is capable of doing pretty much any task asked of it, with myriad reports and other options available. One other feature that can be both a blessing and a curse is that many of the advanced functions needed by the largest businesses are modular, meaning that they require additional purchases to activate. On the plus side you are not paying for things you do not need, while on the other hand businesses that do need these functions need to make additional purchases. While these three programs are the market leaders, they are far from a complete list of the options out there. Also popular are Simply Accounting, an online based program, Quicken Home & Business (for small, home based businesses) and MYOB (Mind Your Own Business). In deciding which one is right for you, you will want to consult your accountant and your banker to see which one they recommend as being right for you.
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