Small Business Accounting Done Right

One of the distinct advantages I personally enjoy with both my K2 teaching team and with my NMGI VAR team is the ability to do direct consulting around the country, hence the name of this regular column, “From the Trenches.” Our consulting is done for many different sizes and styles of accounting firms or clients of those accounting firms as well as some wonderfully innovative tax and accounting practitioners in industry. Because of this exposure in the field, we see some of the best and worst examples of technology. During the next several months, I’d like to give you our view of best practices on several leading areas of technologies including accounting software, paperless or content management implementation, as well as infrastructure implementation issues. This month, I’ll focus on small business accounting.

Supporting Clients

As you well know, there is after-the-fact accounting (or write-up) as well as live accounting done through accounting software. Accounting software can be used in-house, hosted or (in some products) synchronized from one site to another. The way you can support clients is driven in part by the support you receive from the software publishers. Each of the publishers has their attempt to work with accountants or partners. Most of these programs are so valuable to your practice that joining them should be easy. For example, Intuit’s QuickBooks ProAdvisor program includes the Accountant’s Edition of QuickBooks along with a priority support hotline.

Intuit QuickBooks

Intuit is the market leader in the United States for small business accounting with its QuickBooks line. This product has enjoyed increasing success in the last five years, but it has been with us for 10+ years. The product is available in multiple versions and styles, and is a very safe recommendation. The entry point for this product line is a sub $100 version called SimpleStart. We frequently recommend this product, particularly where there is no inventory requirement and minimal to no payroll requirement. This product allows checks to be written and simple financial statements created. For most small businesses that want to do GL, AP and AR, this is a great product. The simplified menus allow easy handling of cash and have very simple in and out transactions. This product is an exceptionally safe choice since the physical code is actually QuickBooks Pro with a different menu. So if the client needs more capability, an upgrade in place can be performed. All of the transactions are preserved since the data files are of exactly the same format. In our opinion, this is the safest small business accounting product today.

Although SimpleStart is good, Intuit’s mainstream products are better. QuickBooks has multiple versions including Pro, Premier, Accountant’s Edition and offerings in several vertical industries including construction, NFP, healthcare, etc. If a company has a limited number of users, less than $10 Million in sales, and fairly simple inventory needs, the QuickBooks line does a fine job of doing the accounting. Starting with QuickBooks 2006, issues like speed, reliability of the data files, scalability, and audit trail were all addressed and solved. The QuickBooks 2007 lines of product have almost as many features as mid-market products of the late 1990s.

Intuit has seen more key opportunities with its product line, specifically to grow the number of users and to add and allow specialty products to integrate seamlessly. QuickBooks Enterprise Edition has satisfied a large number of companies that need up to 15 end users. By helping larger companies, Intuit has seen the need for more sophisticated features and specialized functions they just weren’t going to write. Around five years ago, the vendor opened up the QuickBooks interface with a software development kit (SDK) that allowed reading and writing of data. Today, Intuit enjoys specialized applications for CRM, inventory, manufacturing, route management and document management. The size and complexity of companies that can be satisfied with Intuit QuickBooks has become more of a threat to the mid-market accounting products.