Accounting Software for Small Business

Archive for May, 2010

Your business is doing well. Your customer base is growing, and during the last quarter you actually turned a profit for the first time since you opened your doors last year. You have a solid business plan and now it’s time to think about moving out of your rented space, buying more equipment, or perhaps hiring more employees.

Perhaps your business is profitable but during your slow season you’re short of cash. Or your delivery truck just broke down and you have decided its time to get a new one. You need to get cash to keep your business moving forward. Where do you start?

The good news is that there are a wide variety of loan programs available that can be applied to almost any business situation. The bad news is that the choices can seem complex and overwhelming. Here are some options that a small business owner can consider:

Business Lines of Credit

If your business is profitable over the course of the fiscal year but there are times when you are short of cash because your income is seasonal or cyclical, you may benefit from a business line of credit. A line of credit provides access to cash for a variety of short-term financing needs and gives you the flexibility to draw on the line at any time as long as you pay down the balance.

Typically, once the line of credit is established funds are available when you need them, but the advantage is that you do not pay interest until you draw on the line. Lines can be secured or unsecured, with multiple repayment options and a variety of interest rates.

Interest rates generally range from nine to fifteen percent based your personal and business credit history and other factors. You would generally not use your business line of credit for expansion or capital investment, because you may not realize income from your expansion for many months. For expansion you should consider a loan.

Business Loans $25,000 and Up

A business loan provides access to cash for many kinds of one-time expenditures and long term financing needs such as fixed asset purchases, or business expansion or acquisition. Unlike a line of credit, a business loan is amortizing and is fully disbursed when you close the loan. You may have the ability to lock in an interest rate.

There are many types of business loans:

• Vehicle Loan — Finance the purchase of a new or used vehicle.

• Equipment Loan — Finance the purchase of new or used equipment.

• Real Estate Loan — Finance the purchase of commercial real estate.

• Secured Loan — Get permanent working capital, improve cash flow, purchase inventory and materials, finance accounts receivable, expand or remodel facilities.

• Agriculture Loan — Finance crop and livestock production expenses, purchase equipment, breed livestock, purchase land for farming or ranching.

• Cash-Secured Loan — Get permanent working capital, improve cash flow, refinance debt, purchase inventory, materials, equipment, or vehicles, finance accounts receivable.

Business loan rates depend on a number of factors, including the amount you borrow, your collateral, financial strength of your business, term of the loan, and your credit rating. Over the past ten years business loan rates have fluctuated between four and eleven percent.

Small Business Association (SBA) Loans

If you have less-than-stellar credit or you are not sure you qualify for a regular bank loan, you may qualify for a loan program backed by the Small Business Administration (SBA). The SBA has created a program of government-guaranteed loans designed to make loans to small businesses that may not otherwise qualify for credit. SBA loans make it possible to qualify businesses more easily and provide them with more flexible terms than conventional loan options. You can get more information at http://www.sba.gov/, or talk to your local commercial banker. The SBA does not make loans to small businesses; it is a guarantor of loans made by private banks and other institutions.

Talk to your local commercial bank when you’re ready to consider a line of credit or a loan, and you’ll see the range of choices available to you.

© 2008 Thomas Hauck Communications Services

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This step by step video explains the complete process of completing and filing a 1099 form with CenterPoint Payroll Software by Red Wing Software. CenterPoint Payroll Software is used by businesses and agribusinesses throughout the United States. For more information about CenterPoint Payroll Software, please visit www.redwingsoftware.com/payroll.

• Complete accounting software; integrates with Microsoft Excel and Word
• Quickly generate customer quotes; detailed invoicing; 125+ business reports
• Create and track sales orders and back orders; onscreen “out of stock” warning
• Payment status tracking to view partial payment info and net due for invoices
• Comprehensive time tracking; info auto-flow to both invoices and paychecks

Product Description
Peachtree Complete Accounting is easy to startup and easy to learn. You get the tools you need to start working right away. There are Instructional Demos, Guided Tours, Navigation Aids, Setup Wizard, Sample Company Charts of Accounts, Check Off Task lists and it’s easy to convert QuickBooks Version 4.0, Basic through Enterprise, to Peachtree files. Peachtree Complete Accounting also has additional standard accounting options such as: Customer registration and accep… More >>

Peachtree Complete Accounting 2006

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Accounting Overview

Want to stop using an accountant and do-it-yourself? Looking to replace or upgrade your accounting software. Read on for a high level overview of Accounting Software.

Whatever our business – church, construction, fund, inventory, manufacturing, nursery, payroll, project, restaurant, etc – an accounting software system will help you to lower your costs, improve your accounts’ accuracy and give you a much better idea of how your company is performing. Also, an accounting software system may just help you with the e-filing (electronic/online filing).

Accounting Software Functionality

Generally, you need to manage your sales**, customers**, inventory and other information along with associated documents. You will definitely want to generate reports.

Ideally – to manage your sales**, customers**, inventory and other information – the ‘out-of-the-box’ (minimum or no configuration required) accounting software will manage:

your money coming in (Accounts Receivable)
your money going out (Accounts Payable)
your main documents (Billing, Purchase Orders, Sales Orders)
your inventory (Stock)

Additionally (probably extra cost) you may need your chosen system to manage:

money owed to you
your staff’s expenses and salaries (Payroll)
project times (so that you can charge for actual work against projects your staff are working on)
approval processes (so you can submit, then track who approved what and when)

Advanced Requirements:

integration to other systems (normally enterprise systems)
major imports (when initially bringing data into the system)
minor imports (for regular use by staff for getting small quantities of data into the system)
backing up of the accounting system (meta data, as well as configuration of the system)
reporting/graphs (for high-level views such as Balances, Profit & Loss, Portfolio overviews etc)
Multiple currencies
Import ability
Localisation (allowing you to use the software in your own language)
Cheque/Check printing

The Right Solution For You

You should really, consider:

How are you managing your accounts at the moment?
How many transactions do you have a month? (manual might be best if you only have a dozen transactions a month for example)
What type of company is yours? (meaning what type of legal entity is it?)
How many people wil be using the system?
Do you know what your business needs? If you know what your business needs, then you will be able to better match up functionality of the accountancy package(s) you are considering.
What database will the accounting package be using?

Some Popular Accounting Software Examples:

Personal: GnuCash (GPL), Quicken
Small Enterprise: Microsoft Office Accounting, TurboCASH (GPL)
Medium enterprise: NetSuite (on-demand), Tiny ERP (GPL)
Large Enterprise: Oracle Corporation, SAP

Conclusion

The cost of your chosen accounting software will vary greatly. Your supplier should have no problems showing you (not just telling you) how and why they are a good partner for your company. Don’t be afraid to ask questions – not to trip them up, but to get ansers to issues important to you. Be frank and open with the supplier – you’d expect the same back after all! Negotiate hard – before you sign is the best time for getting a good price and/or goodies (training, consultancy, health checks, etc) thrown in.

Keywords

accounting software, business accounting software, business software, financial software, small business software, tax accounting software, bookkeeping software, free accounting software

References

“Accounting Software Overview” Accounting Software Overview from RCS Limited an IT Training Company.

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As small business owner we need to understand the importance of accurate and timely accounting reports where we will need precise financial information to make the very important decisions we make as owners and managers.

Very often I meet small business owners who have put themselves into a pickle by not managing or paying attention to the valuable information provided in many accounting software packages.

Accounting operations to any business, small or large is like the fuel in your car. If you don’t have the right fuel or enough fuel in your car, you will not go very far.

Over the years I am still amazed at how many small business owners fail to see the value in managing the accounting process of their business. I was always puzzled at how small business owners could get away with running their business without even using Quicken or QuickBooks.

I figured it out. Most small businesses grow so fast that some of us don’t have the time to learn if not worry about the accounting side of the business. Why should we worry about accounting when we’ve got orders to fill, customers to make happy and vendors to manage?

Well, the importance of accounting not only lies in the requirement to file and pay the appropriate amount of taxes at the end of the year, but accounting also affords us valuable information in various report formats that allow us to make smart decisions in our small business.

These reports tell us many things about our small business that we would never think of and these reports also allow us to plan the future of our business as it relates to sales and expenses.

Sure some of us have CPAs or accountants that we give information to on a monthly or even yearly basis, where we should be calculating our sources and uses of cash flow everyday if not every week.

Sources and uses of cash is exactly what it says it is. It defines where are money is coming from (sales) and how are we using it (expenses). The reporting document that helps us determine this process is our Statement of Cash Flow. This report actually tells us in a summary format where our money came from and where it went.

Another very important report is the Income Statement report which tells us how much we sold, how much it cost us to sell what we sold, how much we spent to operate the business and finally our profit from all that work.

There are four pieces or elements of an income statement and they are; sales, costs of goods sold (COGS), expenses (fixed and variable) and income. Some small businesses will classify cost of sales (COS) rather than COGS. Costs of sales are for those businesses that really don’t have to purchase items in the raw material form and re-produce it to make it sellable.

For example, as owner of a consulting firm, we identify ours as COS where if we are a plumbing contractor or a manufacturer of wooden chairs, we would identify ours as COGS because we would have to buy plumbing material as well as wood and reproduce both to get a final product to sell.

The next report that is just as valuable as the previous two is the Balance Sheet report. This report tells us what our business is worth via a particular window of time. For example, I want to know what my business is worth today for the last month. The balance sheet would tell me what I own and what I owe.

This report basically has three really important pieces; Assets, Liabilities and Owners Equity. Each of these sections identifies exactly what it says.

Assets are those things the business deems worth something or those things we can get cash for in a pinch if we needed. This section is also the section banks and other lenders measure a business’ worth.

Machinery, inventory and sometimes your accounts receivables are considered assets. Yes, accounts receivables can be converted to cash via a bank loan, but I absolutely do not recommend this for any business. Although many businesses do borrow against their accounts receivable, I would never do it for any of my clients.

Liabilities are those things the business owes such as short-term loans, long-term loans, wages, taxes, etc. Banks measure this as plain old debt and it’s not good to have allot of it.

Finally, Owner’s Equity is that which is owed to people or groups of investors that pretty much have a right to be paid regardless of the success or failure of the business. It’s just that. We have to identify that other individuals or groups have actually invested into our business outside of a typical bank loan.

Is it OK to have both a bank loan and a particular amount of owner’s equity as a liability? Yes it is, as most businesses do. It is estimated that most business in the U.S. is 80% financed via a mix of both.

So great, now we know about a bunch of reports. These reports are available to you through any accounting software package you use, but you must be using an accounting software package because these reports come from the accounting process that puts the information in the appropriate accounts or sections that will eventually produce these reports.

For every sale there is a corresponding affect within the accounting process that will eventually compile data in one of the reports mentioned above and give you the right information to make a decision. Accounting operations allows us to see our successes and failures day to day, week to week and month over month. We need to review these reports often in order to stay in business.

I have seen quite a few businesses go out of business where when you ask the owners what happened, they will all say the same, “we ran out of money”.

Had those businesses paid a little more attention to the accounting process they might still be in business. Remember, accounting in your small business is like the fuel in your car.

There are many programs out there that will help you understand the basics of accounting where all you have to remember is that accounting functions off of a cause and effect principle.

Every transaction in your business must be recorded where that transaction is managed by an accounting software process that basically works behind the scenes. All you have to do is understand what is occurring.

For example; if I purchase $25.00 worth of office supplies I need to let the accounting software package know what accounts I want that transaction to affect. Another example would be if I sold $200.00 worth of products, I want the accounting side of the business know what I sold via what I purchased to sell.

This last example is a bit complicated and I will save the detail for another article where you should take away the idea that you first recorded the purchase of the raw material, produced something from it, inventoried it and finally sold it for $200.00.

Bottom line is that accounting operations is of paramount importance to your small business.

Often we rely on hiring individuals that say they know accounting but how do we know if those individuals know accounting when we aren’t too sure about it ourselves?

There are many programs available to us as small business owners where we can learn the basics of accounting. Sign up for a seminar or take a class at a local college or university. Your small business is just too valuable to not understand it.