Small Business Accounting Software - 2005

Running a business is all about money. Managing the when, why, where and how much of it is crucial whether a company has one employee or one million.

While it is also essential to effectively manage client and vendor relationships and efficiently manage inventory and other business processes, keeping precise track of incoming and outgoing funds and attributing these debits and credits to appropriate accounts in a double-entry accounting system enables the management of a business to accurately assess the health of the business and take action as necessary to improve it.

The more than 23 million small businesses make up more than 99 percent of the total business market in the United States, accounting for more than 50 percent of the gross domestic product. That’s a lot of money and, unfortunately, it’s not always efficiently managed. As almost any accountant will tell you, their entrepreneurial clients may be brilliant and usually know their business better than almost anything, but they are not so likely to be proficient at keeping their books in a professional manner.

That’s where the right accounting package can greatly assist the small business client and the accountant that provides them with write-up, trial balance, tax compliance and other services. The small business accounting market is mature, with many options that are geared toward specific types of industries, and most programs offer the ability to customize to certain kinds of businesses.

But to be effective for a small business, these programs must cover the “hard accounting” work with an interface that enables a non-accountant to move throughout business tasks such as entering invoices, ordering inventory, receiving payments and paying bills, while the program automatically takes care of the journal entries, transactions and monitors account balances, due dates and other tasks.

All of the programs reviewed in this section provide the basic tools that will help a small business properly manage their books. Most of the programs include additional modules (whether included in the base price or available as an add-on) for managing inventory and payroll, performing basic financial analysis, customizing reporting and managing bank accounts. A few offer more advanced options, including point-of-sale devices, greater human resources management and payroll functions, time-based billing, expanded inventory capabilities and increased contact management tools.

In addition to the programs reviewed in this section, information on a few additional small business bookkeeping products is available here.

The key to finding the right software for a small business is to first determine the primary needs of the company, whether it’s a retail, manufacturing, wholesale, nonprofit or service-based enterprise, and then to find a product that meets those needs and that the business’ owners or managers will actually use.

After consulting with professional accountants and vendors, we identified several areas that are key in the selection of a small business accounting application. Each program was rated based on a scale of up to five stars in each of these areas.

Ease-of-Use/Basic Functionality
This section addresses the ease with which non-accountant users can perform the basic tasks required for daily operation, from initial setup of the program and entering estimates and invoices, to receiving payments, managing vendors, and paying bills and employees.

Available Modules/Customization for Vertical Industries
This area focuses on functions within the program aside from GL, AP and AR. All businesses have to pay their employees, even if there is only one. All businesses have to manage their clients and vendors. What tools are available to assist the user in running the business? With such diversity in the types of small businesses, this section also looks at how the programs can be customized to suit the traditional needs of particular types of businesses.