Winning Numbers
A business financial expert details how to pick a good low-end accounting program.
Low-end accounting programs are catching up to their high-end cousins. Here's how to choose the one that's right for you
You don't have a choice. When you operate a business you have to keep track of what you earn and what you spend. Even if the IRS didn't have a vested interest in your bottom line, you would. To make the financial and managerial decisions that keep a company growing, you need accounting information.
Of course you can collect that information in different ways. Most large corporations have made the move to automation, to customized accounting software that does everything from producing data for financial statements to calculating the payroll for thousands of employees. OK. A $100,000 program may be overkill for your small business. But there is a middle ground between the clerks of yesteryear entering cash receipts with ink-stained fingers and the expensive customized programs and large numbers of financial staffers handling accounting in the modern conglomerate.
That middle ground is populated with what we call low-end accounting programs. Low-end used to mean inexpensive, basic. Today's low-end accounting programs are still inexpensive -- usually under $400 -- but they function more and more like high-end programs.
* * * About the Programs
If your needs are simple -- issuing invoices, writing checks, and printing basic financial reports -- a few programs are still available that can automate your books painlessly. One-Write Plus (from ADP) has been popular for years, primarily because the data-entry forms look like the forms that you fill out by hand when you use a manual one-write check system (those systems alternate pages of checks with pages of ledger; as you write each check, a line of carbon on the back of the check transfers the information directly to the ledger). The newest version, 5.0 for Windows, opts for ease of use, but it could offer more flexibility in customizing reports and forms. It does track salespeople's figures and handle payroll, so there is room for the software to grow with you. But if you need to monitor inventory or bid a job, One-Write Plus isn't the accounting program for you.
If it's sales information you need to track, Great Plains Profit (from Great Plains Software) may be just what you need. The program turns out two types of invoices: service invoices, which show the date and service rate of each line item, and product invoices, which show an ID number, a description, and the unit price and quantity of each line item. The program also allows you to record several types of sales transactions, including cash sales and refunds. And it lets you sell a good and a service on the same invoice because each line item is taxed individually.
Many small businesses have come to rely on their accounting software to help them quote on jobs. Profit's quotes for sales or services can easily be converted into invoices. And if it seems you're always quoting the same job for different clients, the program lets you save quotes for common jobs.
DacEasy's DacEasy Accounting & Payroll 95 produces quotes right from the invoicing screen. A check mark in the "quote box" makes the difference. When you're ready to bill a job you've quoted on, simply remove the check mark and you have an invoice.
If you're producing quotes, your business probably revolves around jobs or projects. That means you're going to need some way to track the costs of each one. Almost all the programs we reviewed have job-costing capability, but Peachtree Complete Accounting for Windows, a new offering from the producer of Peachtree Accounting for Windows, is the most sophisticated. It lets you break down a job into components -- the job itself, phases, cost codes, and cost types -- each an increasingly detailed cost analysis. In the construction industry the job might be a building and the phases the foundation, the walls, the plumbing, and the electrical work. The cost code (a prefix) is unique to each phase; the cost type (a numerical suffix) is common to all of them. The suffix for materials is 01. So PLM01 could be plumbing materials, and ELE01 could be electrical materials.
Intuit's QuickBooks Pro, one of the most popular accounting programs, also does job costing but on a much smaller scale. A job consists of a job type ("the Jones's kitchen") and a description ("refinish the cabinets and lay a tile floor"). You can also attach notes to each job ("the Joneses like shades of blue") and to a to-do list ("pick up tile samples by Tuesday"). Like those of QuickBooks Pro, the job-costing features of M.Y.O.B. Accounting (from Best!Ware) are basic but effective. An example: the program lets you set up budgets for each job and then track actual costs and income.
An honorable mention in the job-costing category goes to Profit. Although not up to Peachtree's standards, it does offer more detail than most of the other programs we sampled. When you're ready to start a job, you can enter estimated cost and revenue figures for materials, labor, and overhead. Then, as the job progresses, the "project card" calculates actual cost and revenue figures by category. It also shows estimated and actual gross-profit and profit-margin figures.
For companies that manufacture or retail goods, keeping track of inventory is crucial. Several low-end programs can help. M.Y.O.B. Accounting has several good inventory features, among them parts assembly and automatic back orders. Two drawbacks though: you have to be running on an accrual basis (recognizing expenses and income when they're incurred or earned, not when cash actually changes hands), and you have to calculate the value of your inventory on an average-cost basis.
Peachtree Complete Accounting for Windows offers one of the most impressive inventory modules of all the programs we reviewed. It allows for three cost methods: average cost, LIFO (last in, first out), and FIFO (first in, first out). It also handles assembly items and can track inventory in a cash-based business.
What about payroll? Do you plan to process your own payroll as you grow? That's a sticky subject, especially with accountants. Depending on the size of your company and the complexity of your payroll (types of benefits, number of extra deductions, and the like), you may want to use an outside service. But if you've decided to try it yourself, you must understand how to report special deductions and file payroll taxes.
