How to Choose and Use the Best Accounting Software
- In This Quick Guide:
- Choosing the Software
- Setting Up the Application
- Customizing the Software
There is a plethora of accounting programs on the market today, but which one is right for you? In this guide, we take a quick look at the top accounting software programs and review how you go about converting from a manual accounting system to a computerized one.
Choosing the Software
There are well over 50 accounting software packages from which to choose. The two best (and most popular) are QuickBooks and Peachtree Accounting.
QuickBooks
There is a QuickBooks 2010 edition, and if you are buying it for the first time, we definitely recommend that edition, but if you already own an earlier version of the software there is no reason to upgrade unless your accountant recommends that you do. You can try out QuickBooks online for free here. QuickBooks lets you match your business by business type, either service-based or product-based. You can import data from Excel, Quicken, or Microsoft Office Accounting. The program accepts credit card payments directly, and up to five employees can work on QuickBooks simultaneously. Its navigation toolbar helps you find your way around quickly.
QuickBooks provides an excellent help section. Its terminology is more user-friendly if you’re not an accountant. For example, the Customer Section is where you’ll find Accounts Receivable, and the Vendors Section is where you’ll find Accounts Payable. There are also sections for Payroll, Inventory, Banking, Time Billing, Job Costing, General Ledger, and Fixed Assets.
We agree that for most small businesses QuickBooks Pro, which can be bought for half the price of the premier version, about $120, would be sufficient to meet your needs as long as sophisticated forecasting is not important to you. You can use QuickBooks over a network with up to five users able to access files simultaneously.
The biggest negative for QuickBooks is the cost of its technical support. You can get free help with installation, but if you have technical questions after setup you have to pay for support. The best deal is $349 for the year, but you can also pay on a monthly basis. The first month is $79 and every month after that is $39.
Peachtree Complete Accounting
Your other key accounting software alternative is Peachtree Complete Accounting. Peachtree Accounting can be simple to learn if you are familiar with basic accounting rules. It has a navigation aid to help you move around the program. The program includes sections called Sales (Accounts Receivable), Accounts Payable, Payroll, Inventory, Time Billing, Job Costing, General Ledger, and Fixed Assets.
Peachtree Accounting does offer 30 days of free technical support. After that, if you still want support you’ll have to pay some hefty fees. Its basic plan is $259 for a single-user product and $349 for more multi-user products.
It’s important to note that, for small businesses, you’ll find it much easier to coordinate with your accountant if you use the same software or an accounting software package that is compatible.
Setting Up the Application
After you decide on the program you want to use, you’ll find each program has a tutorial to help you get started using data from a sample company. Setup is similar for both QuickBooks and Peachtree Accounting, but follow the program’s setup process because terminology may be slightly different. Get used to the features by working through the tutorial offered by the software before you try to set up your own company’s books.
If you are converting from a manual to a computerized system, you already have a chart of accounts and general ledger in place. If you are starting from scratch, you need to develop these two things before trying to set up your company. Although the software has many different charts of accounts from which you can choose, you should have a good idea of the accounts you want before getting started.
You are asked to enter a company name, address, and tax identification number. After that you have to choose an accounting period. This period cannot be changed. If you enter the wrong accounting period, you have to delete the company and start over.
Customizing the Software
The software is set up to operate on a monthly accounting period using the calendar year. If your company has a different fiscal year, when you enter that information the software will automatically format the 12 months based on that fiscal year.
Your next task is to set up the chart of accounts. The software has numerous charts of accounts to choose from based on different business types. Select the one closest to your needs and then customize it specifically based on the chart of accounts you have designed.
Bank Information
After you finish the chart of accounts, you’ll be asked for your bank information. Your main bank account will be used for the Cash in Checking (1000) account. If you have other accounts, you can enter them in the system, but you are not required to do so.
If you screw up royally, you can go back to the first screen, delete the company, and start over. Things don’t have to be perfect, though. Most of what you enter can be changed later. The key exception is accounting periods.
Adding Data
You are now ready to start entering data. If you want to have a budgeting function, you need to enter your budget information first before entering other data. Next set up your vendor and customer accounts, so your data has a place to go in addition to the chart of accounts, which is used to fill the general ledger. Your customer and vendor data should be in place before you start adding transactions.
You can add customers and vendors at any time in the future, so don’t worry about being sure you haven’t missed someone. You also need to set up any sub-ledgers you want to use, such as cash disbursements and cash receipts journals.
If you have employees, you’ll need to add their information as well and set up the payroll ledger. The program allows you to set up an employee ledger for each employee.
If everything looks accurate, it’s time to add your numbers and start using your new software! Good luck, and happy accounting!
From The Complete Idiot’s Guide to Accounting, Third Edition, by Lita Epstein, MBA, and Shellie L. Moore, CPA
