This article is reproduced with permission from the October 1996 issue of Toronto Computes!, and was written by Myles White, Associate Editor.
Whether or not your SOHO (small office/home office) is succesful, you're going to have to keep track of your finances. Can computers help?
If you're starting a small business, whether home based or not, sooner or later you'll get around to tackling the worst part of the work - keeping track of your financial data. If this is your first independant business venture, you're in for a shock and a potentially rude awakening if all you've had to manage before was your personal chequebook and the only tax-related concerns you've had could be handled by a shoebox full of receipts and lining up at the local storefront accountant.
One of the first items you'll want to decide, besides who will do the bookkeeping, is whether to keep track of your receivables and expenses on paper or to do it with the help of a computerized, small-business accounting program. To help sort this out, we've sought advice from a pair of experts.
Vernon Paige and Francis Mackan are both computer savvy accountants located in the Metro Toronto area, and each has a long list of small-business clients who have succesfully made the transition to computerized accounting - with an almost equally long list of those who have made sometimes serious mistakes in their approach to the idea.
One of the selling points for computerizing your records is, assuming you've been diligent about entering them, that preparing information for your accountant at the end of the year will take less time, be less frantic, and because you've done most of the work of organizing the data, it will cut down on the billable hours the accountant will charge. Maybe; maybe not.
"There was a husband-and-wife team," says Mackan, "who made the mistake of listening only to a computer consultant. She was competent to advise them about hardware, but had no accounting experience. Over my objections, she convinced them to install the full-blown version of Accpac. It's a robust system for larger companies, particularly when several key people are keeping the books and both security and an iron-clad audit trail are required, but it was overkill for them.
The consultant simply installed the software, then walked away and I had to help them clean up the resulting mess. Instead of saving money, this year's bill for services was considerably more than it would have been if they'd stayed with their paper-based system."
This doesn't mean that there is no place for computerized systems.
"Almost anyone can benefit from a computerized accounting system, " says Paige. "It will help foster discipline and simplify keeping books, inventory tracking, and payroll as well as providing management tools. But, " he adds, "if you only have a couple of recurring expenses, don't need analysis tools because you already know how well (or poorly) your business is doing, have only a handful of customers and receivables, no inventory to track or employees to pay, then a paper based system is simpler."
Mackan agrees that not everyone can benefit from computerized accounting systems. "In many smaller businesses, particularly 'mom-and-pop' situations, people are working 12 and 14 hours a day just to operate the business. The person doing the books is the one who gets stuck with it, often has no accounting background, and regards it as an unproductive drudge task.
"Add the inevitable frustrations involved in learning how to run a computer and some potentially unfirendly software and you have a recipe for disaster. Too often I find that clients want to switch over to a computerized system because they already have a computer and are looking for something else to do with it."
"On the other hand," Mackan continues, "if you're a computer type of person, learning new software isn't a burden for you, and, when you balance the value of your time against what might be a minimal saving at the end of the year, there are some packages I do recommend, including NewViews (Q.W. Page and Associates, Inc.-a DOS-based program-see sidebar) and M.Y.O.B.-primarily because they are very forgiving of mistakes and allow you to make corrections easily."
Paige agrees with Mackan, although he personally has more experience with QuickBooks and M.Y.O.B. then with NewViews. "QuickBooks also allows for good flexibility" he says, "but it lacks a Canadian payroll module.
"However," Paige warns, "just taking our word for it, although I urge people to at least listen to their accountants, isn't enough. You have to do a little research into what may be most appropriate for your business, particularly if there is something unique you do. It may be more important to have a strong job costing unit. You may need more control over customizing the front-end (M.Y.O.B.) or over the reporting end (QuickBooks)."
We reported on four small business accounting programs for Windows in our May edition. Since then, there has only been one change in the Windows market (which accounts for over 60 percent of it.)
Simply Accounting 4.0 was sold under a Computer Associates division known as 4 Home Productions and at the same time of our report, there was a wild discrepancy between the US list price ($89) and the Canadian list price ($225-street price about $139 to $149).
Since the spring, a couple of things have taken place. 4 Home Productions no longer exists, but Simply Accounting is still alive and well (and, who knows-references to it may start to reappear at C.A.'s web site -http://www.cai.com-by the time you read this).
CA is in the process of reorganizing and has created a new company, AccPac International, which has picked up responsibility for Simply Accounting along with AccPac and Accpac BPI (a lighter, Dos based version of the program).
Acording to CA Canada's John Schousten, the price discrepancy has been resolved by raising the US price (it had been lowered at the time of our report for "competetive reasons") and a new version, 5.0, is currently in development and due for release in the "February to March (1997) timeframe." By the way, Simply Accounting 4.0 also includes a Canadian Payroll module.
For more information, contact Computer Associates Canada, 1-800-225-5224, (905) 676-6700, or fax (905) 676-6734.
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