Setting Up a System – Software Makes It Simpler
The easiest way to get your bookkeeping done is to have someone else do it. That’s not always practical (especially from a cash-ﬂow perspective) and not always a good idea for someone trying to get a handle on his business ﬁnances.
Simply using a computer does not mean you have a computerized system. For example, typing your entries into a Microsoft Excel spread- sheet is not the same as using dedicated accounting software. While the spreadsheet will help with some of the math, it will not take care of any posting or reporting tasks on its own.
In the beginning, using accounting software may seem very awkward and time-consuming, but that will pass. Once you get used to the program, the entries will practically enter themselves. Most of the more popular versions try to make information entry as simple as possible, with their screen forms looking a lot like the paper kind. For example, entering the information to pay a vendor shows up looking like a check from your checkbook; entering sales takes the form of a standard invoice.
Unless you have an overwhelming reason not to, using accounting soft- ware is really the way to go. That said, you still need to know what’s going on behind the scenes—such as how journal entries work, and what posting does. Without this base of knowledge, you may be able to get by with the software, but your accountant will probably have a lot of ﬁx-it work to do at year-end (and that can add a lot to your bill). When you understand the basics of accounting and bookkeeping, you will be able to take full advantage of your software and all its features.
How Software Can Help You
There are probably dozens of reasons why a computerized system makes more sense than a manual one, but these three should be enough to convince you:
- It won’t make calculation mistakes.
- You’ll never have to post transactions to the ledger.
- Reports can be generated automatically.
Using accounting software will save you countless hours during the year, and that time can be better spent on building your business. On top of that, the programs give you instant access to account balances and special reports. If you want to know how much your biggest customer owes and how long the amount has been outstanding, all you have to do is click your mouse a couple of times and print a report. These programs are very versatile, and many even come with enhanced report capabilities that allow you to customize virtually any information you need, with just a click of the mouse.
Which Program Should You Use?
When it comes to selecting accounting software, there are only two factors you have to consider: which one your accountant can work with, and which is the easiest for you to work with. Other than that, there is not much difference in how they perform. There are folks who swear by Peachtree, and others who love their QuickBooks (these are the two programs most commonly used by small businesses). Before you buy the full version of any accounting software, which generally costs $150 to $250, ask the manufacturer for a trial version. Most trial versions give you full functionality, but only for thirty days; after that, you either have to buy the full version or switch to something else. Ask your accountant which program she uses for her small-business clients, and try that one. If you like it, stick with it; if not, try something else (your accountant will still be able to work with you at tax time). As soon as you ﬁnd software you can work with comfortably, buy it.