In the black and in the pink

For a lot of home-based or small businesses, accounting practices come down to an Excel spreadsheet and a bunch of receipts in a shoebox. The idea of using an accounting software package can be daunting for those without formal accounting knowledge – and even more so for those who are uncomfortable with computers in the first place.

But it’s a needless fear, says Esther Friedberg Karp, principal of CompuBooks Business Services. Today’s accounting packages are geared toward the non-accountant, and they can even hide the accountant-speak in the background. So you don’t have to freak out if you don’t know if you should be crediting revenue, she says.

Some small office/home office (SOHO) users say they don’t want to spend the money on such systems, but prices have come down to the point where it doesn’t make sense not to, Friedberg Karp says. “I don’t consider it an expense at all – it’s an investment.” On an internal basis, it helps manage your finances and your business as a whole. On an external basis, it presents a more professional image to customers, partners and even your banker.

In Canada, it’s really a two-horse race between QuickBooks and Simply Accounting, both of which have loyal followings. There are also a few custom offerings out there. So how do you decide what’s best for your business?

Do your research on the Internet – not just on company Web sites, but also in user groups and forums where people discuss problems or successes they’ve had with one package or another. Talk to your accountant. Talk to the vendors. There are also 30-day trial versions you can download and play with before buying.

When choosing between basic versions and more advanced versions, consider your requirements today and whether those requirements are going to change three years down the road. If you plan to do business in the U.S. (and/or in other countries) you will require multi-currency capabilities. If you’re a micro-business and you plan on hiring employees you’ll want to have payroll capabilities.

If you really don’t want to make an investment right away, consider using inexpensive personal finance software such as Quicken (which comes pre-installed in some computers). It has basic functionality and it allows you to migrate to QuickBooks as your business grows, says Friedberg Karp.

The next step up is EasyStart, which is priced at $100 but can often be found on sale for about $50. The terminology in the product has been changed to “cash in” and “cash out” so it’s designed to be as easy as possible for non-accountants, says Chris Bain, product manager for Intuit Canada‘s Small Business Division. QuickBooks Pro, which costs $200, is designed for small businesses with more in-depth accounting needs such as inventory and payroll (offered as an add-on subscription).

Being organized from the get-go will mean a lot less anxiety about finances. “When you want to go for financing, you can’t go into a bank with a shoebox,” Bain says. “It’s that peace of mind that you’re in control of this information.”

Installing the software is no different than installing any other type of software, but if you have complex financials, an accountant can help you get the most out of your accounting package.

If you subscribe to the payroll application, there will be the odd update to apply in order to get the most recent information about such things as changes in legislation and compliance. If you sign up for automatic updates, however, they will happen automatically.

Look for something that’s easy to set up, so you don’t have to hire an expensive IT firm to do the installation, says Scott Zandbergen, director of product management with Sage Software. Simply Accounting Entrepreneur starts at $69 and Simply Accounting Basic, which includes project costing, inventory and payroll, starts at $149. The software has a toggle switch that allows users to switch between accounting and non-accounting terminology.

The main catalyst for a small business to buy accounting software, he says, is GST. Once you’ve got a GST number you have to start reporting the tax, so look for a product that supports the requirements of your province and your country, such as tax regulations around PST and GST. (Both Simply Accounting and QuickBooks are Canadian products.) If you choose a U.S.-developed product, make sure it’s localized for the Canadian market and that you’ll be able to get the support you require.

Some, like Friedberg Karp, believe sticking with a Canadian product will eliminate any such problems. For example, she says the Canadian Payments Association, which is made up of banks and financial institutions, has come up with new cheque standards that will be mandatory later this year. Canadian accounting software will adhere to these new standards, whereas U.S. software will not – at least in the short term.

The higher-end products – such as Sage Accpac, Sage BusinessVision and Microsoft Dynamics GP (formerly Great Plains) – are generally too big for SOHO businesses. “Now you’re talking scary because they’re much more extensive and they’re really designed for people who know accounting,” says Friedberg Karp. “It’s like killing an ant with an elephant gun – you just don’t need it.”

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Vawn Himmelsbach
Vawn Himmelsbach
Is a Toronto-based journalist and regular contributor to IT World Canada's publications.

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