Accounting Software for a Small Business

Can you do your accounting the old fashioned way with a ledger book? Yes, you can, but with all the accounting software out there, why would you?

In general, you probably wouldn't, but I do know of a number of small businesses that have tracked their accounts in Excel for the first few years while waiting for the company to generate enough cash to buy an accounting package.

I don't recommend this strategy because basic accounting software is not that expensive and keeping appropriate track of your accounts is important for your business. Keeping a good account allows you to track your profitability by customer, allows you to understand how your employees spend their time, and allows you to understand how your marketing dollars drive your sales.

Make sure when you get your software that you are able to:
Track every revenue item and every expense by customer or job type.
You are able to customize your expense categories.
The reports that you can run will give you a good understanding of how money flows through your business.
Keep time by employee and run reports showing time by customer.
Download your data to your accountant's software system.
Have more than one seat license to use the product.
The three packages often recommended for small businesses are QuickBooks Pro 2008, Peachtree Complete Accounting 2008, and for Mac users: Myob Accountedge 2007 for Mac Also Includes Network Edition. (QuickBooks Pro also has a Mac addition and MYOB has a PC addition).

From my discussions with business owners, the majority start out with QuickBooks, but don't like it that much. Peachtree seems to be the favorite, but it is not available on the Mac. Any of these packages are fine for a small business, but please make sure that you have an accountant help you set up your accounts if you do not understand accounting yourself. The software will only benefit you if you understand what it is telling you.

Another note: if you are doing Department of Defense contracts, you must comply with the DCAA (Defense Contract Auditing Agency) accounting rules. A lot of specialty accounting firms would have you believe that you must have special software to be DCAA compliant. In many cases, special software will make it easier, especially if you have multiple contracts over multiple years. If you are just going for an SBIR or two, the above mentioned accounting packages can be used and can be DCAA compliant. Go to the DCAA website and click on the menu item: Standard Audit Programs. About half way down is the Preaward Survey of Prospective Contractor Accounting System. The DCAA will do an audit of your accounting system prior to beginning an award and this is the check list they will use to make sure your accounting system is up to their standards.

Please visit my website for more small business finance advice: http://cfoyourself.com

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