Setting Up a Bookkeeping Software System

If you are like most small business owners, you know you need a software package that will handle your bookkeeping and accounting needs, you just aren’t sure which one makes the most sense. Is it QuickBooks (which has the majority of the market share), Peachtree, Microsoft Money, or one of the other dozen that line the store shelves? And once you do buy a package, what’s next? Can you really just plug and play, or are you going to need support?

A good place to find these answers and more is your accountant. He or she should know your business intimately and can recommend the package and features you need. Many accountants have a preference for certain packages, and since they can be a valuable resource after your purchase, listen closely to what they recommend. Consumer Reports can be another valuable resource.

Whether or not you turn to an accountant for advice, take the time to do an analysis of your needs. Do you need to perform high-volume sales orders? large credit card transactions? or inventory tracking? Write down your requirements in a checklist. Mark which requirements are critical and which ones are just desired.

When it comes time to purchase, you can check online sites such as or discount retailers like Best Buy. Because the cost of these packages is rarely more than a couple hundred dollars, it’s probably not worth wasting too much time looking for the best deal. Unless you have very specialized needs, it’s smart, however, to pick one of the major brands such as Peachtree or Intuit’s QuickBooks because these companies will likely be in business (and offering support) for as long as you are in business. They also have extensive online support and a community of advisors that can help you along the way.

Look for a package that you can test. Find out if it is easy to use (although that is a bit of a misnomer, more on that later). If you are going to anoint an employee to handle bookkeeping, make sure he or she tests the software as well. Find out if the software program works well with other applications such as Excel.

While it’s difficult to know exactly what your needs are going to be in three to five years, take a guess. You want to buy a software program that will be able to grow with your business — at least for the near future. Look for limitations on the total number of users and the type of reports available.

Be careful here. Entrepreneurial dreams often don’t match reality. Don’t go top of the line and spend more than is necessary. Even if you believe in five years you will need a sophisticated accounting program, remember that even QuickBooks has an enterprise edition that can be customized to fit your needs. For example, James Claime, a software consultant, has integrated QuickBooks with Microsoft Office Project so one of his clients, a pool contractor, could match each phase of his construction project with his receivables and payables.

Once you have purchased your software package, get help setting it up and learning it. All the software packages talk a good game of how easy and intuitive they are, but there are numerous ways to go wrong. “The beginning of the learning curve is tough,” says Tina H. Anderson, who is a small business consultant and a QuickBooks expert.

Consultants, who charge anywhere from $45 to $150 an hour, can help you correctly set up your program, including the chart of accounts, and give you a tutorial on key accounting concepts. It’s better to spend a few bucks and get good advice upfront rather than waiting until tax time to discover costly errors.

To find a consultant, first ask your accountant. He or she might be able to help you out. Also, visit the Web site of your vendor. Intuit has a list of what it calls ProAdvisors.

Even if you hire a dedicated bookkeeper, make sure you learn the program yourself. “The business owner had better know how it works; otherwise they are just begging to have someone steal from them,” says Anderson. “The more they know the better off they will be.”