Business Software » Financial Transactions

Deciding Between Bookkeeping Software And Bookkeeping Services

admin — Wed, 02 Jun 2010 09:48:00 +0000

Every small business is required to keep bookkeeping records to produce at the end of the financial year a set of accounts to show the sales income, business expenses and the net profit for tax purposes. Medium and larger businesses employ accounts clerks, bookkeepers and accountants to maintain the financial records and produce regular accounting information.

Small businesses and in particular self employed business have a choice in how the financial accounts are prepared and produced. A small business may employ the services of a bookkeeper to produce the accounts while another similar business may keep a manual record of financial transactions while a third option is to use a bookkeeping software system.

There are several advantages and disadvantages to whichever course of action a small business may take to produce the financial accounts and at the outset it is better to make a definite decision on which route to take. Financial accounts, financial control over the business activities and the knowledge of how well or badly the business is performing is crucial to success in the business environment.

The underlying necessity is that if the small business does not take a decision on its financial accounting then at the very least it must accumulate documents of prime significance such as sales invoices, purchase invoices and possibly bank records during the financial year and assemble these into some sort of order after the end of the financial year for tax purposes. Failing to keep financial records often results in a succession of administrative burdens and often also leads to financial penalties if taxation deadlines are not met.

If the small business owner chooses not to go down the route of using bookkeeping software or outsourcing the financial function to a bookkeeper or accountant then manual financial records must be kept. Producing an income and expenditure account for the business using the prime financial documents of business is not rocket science and most businessmen capable of running and managing a business have the skills required to producing the bookkeeping records.

The major disadvantage of a small business keeping manual records is that documents get lost which may result in profits and taxes being over declared, fines and penalties through inaccuracies and often when accounting is produced in this way it is done at the end of the financial year purely for tax purposes rather than as an essential tool of the business and that reduces financial control within the business during the financial year to a minimum and often zero.

If a manual bookkeeping system is adopted then disciplined recording of the financial information on a regular basis should be enforced and regarded as an essential function and not an administrative burden. The main purpose of regular accounts being to both see and understand the financial position of the business and take positive action as required at the earliest opportunity to achieve a satisfactory financial result.

Other alternatives include utilising bookkeeping software which is effectively often a manual system in itself but within definite parameters to produce the essential information. A bookkeeper might be employed whether a manual system is used or bookkeeping software adopted.

Using bookkeeping software has many advantages. First of all any small business that has purchased bookkeeping software is more likely to keep regular up to date accounts than one that has not. And secondly the bookkeeping software is likely to provide a fixed set of disciplines and produce the type of records a small business requires for both the preparation of regular financial statements and the end of year tax returns.

Another major advantage of bookkeeping software is that records tend to be less likely to be lost or mislaid; the packages can be backed up as required but essential financial performance can be improved by greater financial control. All businesses work towards producing a satisfactory bottom line and only by producing regular financial statements can the business obtain the earliest information to achieve that satisfactory performance.

Bookkeeping software comes in many different formats from simple spreadsheets to more complex data based accounting software. For a small business the bookkeeping software of choice is often a simple system requiring limited accounting knowledge but must also be a package that produces the desired end result.

The worst bookkeeping software is a complex program requiring prior accounting knowledge that the small business either does not fully understand, cannot be bothered or does not have the time to learn and having tried the system then abandons it. Such a process just causes frustration and time to start again with a different solution.

Bookkeeping software in effect automates the manual keeping of financial records. To get the most benefit from a bookkeeping software package each small business should prepare regular financial records to enhance and improve financial control, take financial decisions and achieve the desired bottom line result.

Bookkeeping can be outsourced to an accountant or bookkeeper and there advantages in doing so. The financial records are generally maintained in good order and regular financial reports produced. If the small business has a volume of paperwork that becomes a burden to process and keep on top of then a bookkeeper may be the best solution.

Employing a bookkeeper becomes essential when the paperwork burden reaches a stage when it distracts the small business owner from getting on with the main task of operating the business. A bookkeeper has to be paid and that cost should be viewed as the cost not of producing the financial records but as the amount to be paid to release the time of the small business owner and also to produce the financial statements on which action can be taken to improve profitability.

A major disadvantage in using a bookkeeper is that the small business owner may remove themselves from the detailed records. By producing the accounts themselves the small business owner sees every financial transaction at least twice, once when the transaction is carried out and again when it is entered into the financial records.

This second view of the accounts can be important, errors in management judgement can be noted, mistakes and bad practises become more apparent. Missed documents are much more likely to be noticed if the small business owner produces his own bookkeeping records than if the task is carried out by a third party such as an accountant or bookkeeper. Nobody knows the business as well as the small business owner knows his own business.

The conclusion and decision each small business should take is doing something. A manual bookkeeping system may suffice but the business may be better served using bookkeeping software to increase financial control and performance. If the administrative burden of maintaining the paperwork detracts the small business from its main operations then an accountant or outsourced bookkeeping services is a logical solution.

By: Terry Cartwright

Real Estate Accounting – Software For Your Property Management

admin — Tue, 11 May 2010 19:49:02 +0000

Are you planning to start your real estate business? Well, if that is so, then you need to take into consideration one vital aspect of any business and that is accounting. In addition, in the case of real estate, accounting plays a much important role. As real estate business is all about financial transactions made by numerous people, the accounting department needs to be extra alert. This department follows certain principles as well as strategies to maintain a proper setup for the business of real estate. Here, it becomes a tedious job to handle the accounts and that is why only experienced accounts qualify for the job. The professionals in the field have to keep a track of each detail of the financial transactions made.

Real estate accounting deals with maintaining of the book records. In addition, the accounts have to keep a track of the ledger books, balance sheets and the debited as well as the credited transactions. All the information is stored for future purposes and it is the responsibility of the account to take care of the authenticity of these records. Moreover, this is not all; a professional account in real estate also keeps a record of the daily costs that include utilities, maintenance and management of the business. Moreover, this department also deals with property taxes, depreciation charges and insurance. Thus, handling the position of a real estate accountant is a responsible job and not just every body’s cup of tea. It needs commitment and calm nature to handle pressure.

When the accountants define the strategies for their accounting process, they need to emphasize on the strategic necessity of the occupancy cost to make sure they do not get troubled while handling the accounting of real estate. A lot of accuracy and concentration is required in real estate accounting because the success of the real estate business depends upon it. It helps the businesses to grow and reach newer heights. In addition, it also helps the business to curb the losses that has been faced due to some reasons. There are a number of ways that are used to ensure that the accounting department works smoothly in the real estate business. And that is why technology has taken over the task of human beings.

Yes, in the present times with the advancement in the technology, you can also get real estate accounting software to handle your business’s accounts. This software is much more reliable. This software includes the management of areas like distribution, payroll, budgeting and accounting as well. Moreover, they are made with a highly user friendly interface so that the user does not need to be a computer genius to operate them. This software is popular because it provides flexible and scalable solutions. The software has changed the scenario of the real estate industry. You can get this real estate accounting software from the Internet. Some of them are also available for free trial version.

By: Alvis Brazma

Small Business Accounting Software Equals Simple Bookkeeping Spreadsheets

admin — Fri, 15 Jan 2010 02:44:35 +0000

Accounting software is used by accountants to enter many complex financial transactions into the financial books of account and is almost invariably based upon double entry bookkeeping principles. A major advantage to those companies and the finance staff is the extent to which financial information contained in the database can be queried for financial control purposes.

An accountant needs to not only ensure the financial records are accurate but also retrieve any part of the accounting records to answer accounting questions on the accounts, provide a legal basis for the transactions and report the financial statements at regular periodic intervals.

The small business has different accounting needs which are better described as bookkeeping than accounting. For non limited companies that do not need to produce a balance sheet then a simple income and expenditure account can be produced much simpler using single entry bookkeeping principles.

Less financial control is often required from small business accounting software as the bookkeeper is often the owner manager who already has an intimate knowledge of each transaction. Books are still required for tax purposes and a solid requirement of preparing a set of financial books for tax purposes is that each entry is supported by third party evidence.

Examples of third party evidence would be sales invoices, purchases invoices and bank statements. Financial transactions where no receipt exists can still be entered in the business books although all transactions not carrying third party evidence could subsequently be disallowed for tax purposes and certainly would be if the amounts entered indicated unusual income or expenditure.

Producing an income and expenditure statement using single entry bookkeeping is little more than making two lists of financial transactions. Those lists being one of sales income received from sales invoices or receipts issued to customers and the other of purchase expenditure being from purchase invoices received from suppliers.

To record sales income it would not normally be sufficient to simply add up the total of the invoices as such a summation does not leave an audit trail of the items which have been included. A written list of sales invoices does provide an audit trail.

Sales accounting for a small business accounting purposes can be either a manual list of the sales invoices or by using a spreadsheet package a list can be made on a bookkeeping spreadsheet. Using a spreadsheet for the bookkeeping has advantages as simple formula can be used to add up the column totals.

The essential information to enter for a sales invoice would be the date of the sale, name of the customer, sales invoice number if applicable and optional a brief description of the item sold. In the next column would be the total sales invoice amount. If items like value added tax are required to be accounted for then an additional column would be required to accommodate the vat or sales tax accounting.

A further small complication might be if at the discretion of the small business owner additional information was required from the bookkeeping records to indicate the totals of the different types of products and services then additional columns could be incorporated to enter the net sales figures in these columns.

There it is then, a simple list of sales invoices to satisfy the sales accounting requirements for a small business where a balance sheet is not required.

On the expenditure side of the business the bookkeeping can also be a simple list of the purchase invoices and receipts showing the amount spent. The list should also produce an audit trail by showing the date of the purchase invoice, name of the supplier, purchase invoice for identification purposes and the total amount spent.

Usually tax returns are the main purpose of producing small business accounts and invariably some analysis is required to show what the expenses have been spent on. That is not difficult to achieve and as with the sales accounting the owner manager can add additional standard columns to the bookkeeping spreadsheet.

The expenditure analysis columns do not need to be a different column for each type of expenditure. It is better to set up and group the analysis columns in general headings which can accommodate all the expenses.

Such columns may include stock, other direct costs, premises costs, general administrative costs, transport and delivery costs, repairs and maintenance, travelling and hotel costs, motor costs, bank and legal costs and other expenses. It is better not to enter too many items under a general heading of other expenses as this is more likely to be investigated as the type of expense has not been precisely identified.

One important column to also include is for asset purchases as fixed assets usually have different tax rules applying to the claim of the expense against tax and should be separated from other expenditure.

Having set up two bookkeeping spreadsheets the task is then to produce the income and expenditure account by collecting the totals of each of the analysis columns. The sales total is the sales turnover from which is deducted the totals of each of the expenditure classification totals with the result being the net profit and loss of the business.

Where stock is bought and sold a further adjustment may be required to account for the difference between opening and closing stock. This is done by taking a physical stock check and valuing the stock at the start and end of the financial period.

On the income and expenditure account adjust the stock purchases figure by adding the value of the opening stock and deducting the value of the closing stock. The result is not the stock purchases total as shown in the bookkeeping spreadsheets but the cost of the goods which have been sold to produce the sales turnover being reported.

Simple bookkeeping for a small business accounting purposes can be two lists of sales and purchases supported with sales invoices and purchases invoices.

By: Terry Cartwright

Free Home Business Software Is Out There!

admin — Thu, 10 Dec 2009 19:14:59 +0000

Free home business software can give you a head start to making your dreams come true. There are varieties of software programs available on the Internet that can help as you embark on your new adventure. All new entrepreneurs need gain access to information to make the important decisions that come with business ownership. With the use of free home business software, novice business owners can work like MBAs.

Accounting is one of the main areas that businesspeople need assistance with. Free home business software exists for all facets of the accounting cycle. One program very beneficial to small business owners is InstantCashBook 3. Simple and easy to use, this tool is meant to help small business operators record daily financial transactions. Enter your daily receipts and this program will prepare Income and Expense Statements. It is very easy to use and requires no formal training in accounting. InstantCashBook 3 also will prepare tax reports in a timely manner. This program is a shareware offering a free 30-day trial.

Invoicing and billing is another area that is difficult for some business owners starting out. Free home business software is obtainable for this duty as well. InstantInvoice 3 for the small business can track customer payments and outstanding invoices. It works very fast setup and is easy to use. You can print reports like invoice listings, sales by customer, and outstanding invoice lists. Individual customer statements can also be generated. It too is available as shareware free for 30 days.

Free home business software can be found for the greatest threat to your business, if you use the Internet, viruses. If you use your computer online for any reason, a worm or some other form of virus such as worms can get into your system and totally wreck your hard drive. Fortunately, there are programs out there which you can use absolutely free. One such virus protection program is avast! With the latest version you can protect your computer and thus your business’ information network. New viruses pop up all the time. To get virus protection, simply download from their website, follow the instructions, and you can use their product for one full year, free of charge!

By: Daegan Smith

Vital Importance Of Small Business Accounting Software

admin — Tue, 24 Nov 2009 11:04:21 +0000

Every business functions through a range of disciplines, sales and marketing, operational skills, purchasing and management. A small business accounting software is also an essential tool to bring financial discipline to the business. No matter how skilled and well trained the business every small business needs a full range of functions to reach the highest levels of success.

The first lesson in business is to ensure that business has sufficient cash to trade the next day. Failing to meet this target and the business is finished which is why accounting and in particular accounting software should be regarded by the small business management as an essential piece of kit.

This comes in many guises some of which will be more suitable for a particular business than others. Nevertheless the choice to adopt a solid form of financial control is vital to ensure sales are higher enough to generate profits, margins are sufficient, costs are controlled, net profits are generated, cash flow is under control and losses can be identified and reversed or halted. No large business would survive without a sophisticated system of financial control and small businesses have the same requirements albeit on a different scale.

Many entrepreneurs who run a small business regard the accounting function and the recording of financial transactions as an administrative burden. Small business accounting software should not be viewed in this way but instead as a tool to assist the generation of safer stringer profits and the early warning system of dealing with problems if the business does not perform.

Use it to update the financial records at least once each month. With sales recorded every month peaks and troughs in performance are obvious and can then be examined to replicate those actions that produced higher sales levels and cut out those actions which produced lesser results. The result hopefully being sustained sales growth.

Record all the costs each month and as with sales the trend to higher costs or more efficient cost control will be evident from the financial accounts. Also of importance will be the profit margin being achieved and this can be viewed against the level of sales and justified. Statistically small businesses run by born salesmen achieve high sales but at the cost of lower margins while businesses run by accountants tend to achieve higher profit margins but with lower sales.

This statistical fact is true as is also the fact that most small businesses are run by neither accountants nor salesmen but by the skilled worker applying their trade or area of expertise. By using a small business accounting software the entrepreneur can judge what he would like the figures to show against what they actually show and take the necessary action to change the future and produce the desired result. Without accounting software the entrepreneur works in the dark depending on hunches rather than financial facts.

No matter how good or bad a business is the cash flow or lack of it might well determine future growth or in the worst case scenario, survival. Many small businesses that do not use a small business accounting solution package and run into difficulties have often been in financial problems for many months before it is obvious as reductions in profitability are hidden by extended credit from suppliers or tightening credit lines with customers.

It can indicate which parts of the business are doing well, where action is needed if underperforming and may also indicate where action needs to be taken. Accurate control of money owed in and money owed out is extremely difficult without the information to know how significant these figures are. But they can be critical for some businesses and using a small business accounting software that provides this information is crucial.

A disadvantage is that it may sound like a foreign language but it does not have to be so difficult. Accounting software using a database can require some bookkeeping skills to get the most out of the system but there are other alternatives. A solution written on excel spreadsheets that produces all the main requirements with all transactions visible can be an ideal solution for small businesses with little or no bookkeeping or accounting knowledge.

By: Terry Cartwright