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Tuesday, August 21, 2007

A buyer’s guide to Small Business Accounting Software for new businesses

Good financial management information is critical to the success of any new business. Appropriate accounting software can make it easier to produce this information on a timely basis. How can a new business owner choose the best package for his business?

First of all – speak with your accountant

The best person to ask is your accountant. A start-up business has a lot to study and the accountant can be an essential support in the early days, so it makes sense to use an accounts package with which your accountant is familiar. To start with it means he can help you to set it up correctly.

Take a test drive

Many suppliers will let you download their software and run it in demo mode or for a limited period. Do this if you can. Or, at least check the minimum hardware and operating requirements before you buy – some of the latest packages will only run under Windows XP. Most will ask you to register the software online, so you’ll need to be able to get online when you install it.

Getting started

Most of the accounting packages designed for start-ups use a series of on-screen questionnaires, to lead you through the initial setting up. Some of your answers will be irreversible – typically your choice of accounting year end – so some initial planning is required before you start. Choosing an appropriate chart of accounts and the right tax accounting option are also necessary at this phase. Many of the dedicated start-up packages provide tutorials, help sheets or online help articles to guide the new business owner through these initial decisions, so take time to explore your software and the supplier’s website. Decide when you will first record sales – at the order/quote stage, when an invoice is issued, or when the customer pays you? If you want to be able to print sales invoices and track customer accounts make sure the chosen package has this facility. The top software suppliers can also supply pre-printed customer invoice and statement stationery (at a price) to fit their software. Learn how to reconcile the bank account, either using the software’s own help or by getting help at the beginning from your bookkeeper.

Make Reports

Getting the information into the computer is only half the battle. Getting it out is the other. What you want to know answers to those questions:
- How much money do I have?
- Am I doing better than last year?
- How much taxes do I owe?
- Who owes me money?
- Whom I must pay this month?

Good software will come with a set of reports covering all these questions and will display or remind you of important financial facts and terms.

Is your software worth?

The latest trend in accounting software is subscription-based pricing. Make sure you are happy with the future commitment you are taking on. Does the price include telephone support or do you have to pay extra? If so, is the support line open during the hours you are likely to want it? If you plan to grow your business significantly, is there an upgrade path to the fully featured version of this accounting software? Established SME software suppliers such as Sage and QuickBooks have start-up packages that you can migrate to their grown up packages. Single product suppliers can’t offer this option. However, many so-called "start-up" packages will take a new business up to a reasonable size before they can no longer cope, and some come as multi-user from the outset.

What’s next?

The other growth area this year seems to have been in online accounting services, where software is hosted by the supplier and you simply access it over the Internet using a normal browser. The program and your data are both held by the hosting company, meaning that you can access your accounts anywhere in the world if you can get online. Most of these packages are written purposely for the internet so direct comparison with desktop packages is not so easy, but they typically offer a full range of accounting modules and most allow you to give your accountant direct access to your live accounting records, which enables them to give you a more pro-active advisory service. If you need to access your accounts from various locations, or have been offered an online solution by your accountant you should consider this option.


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