Keeping Your Accounts in Order

Too many entrepreneurs tend to ignore financial management--a big mistake. Uncollected receivables can rob them of vital cash needed to run their business. Unpaid bills can ruin their credit. Failure to keep on top of bank accounts or tax obligations can spell disaster.

For the majority of small businesses that don’t have accounting departments, the responsibility for these issues falls to the “chief cook and bottle washer.”

If your business is really small--a one-person home office, for example--you can probably get away with using a personal finance management program like Intuit’s Quicken or Microsoft’s Money. Intuit (https://www.intuit.com) publishes a version of Quicken called Quicken Home and Business, which includes all the features of regular Quicken along with the ability to create and track invoices, print customer statements, manage basic accounts receivable and accounts payable, and track reimbursable expenses and tax-related expenses. Microsoft’s Money 99 Personal & Business program (https://www.microsoft.com/money/) is also designed for sole proprietors who file a Schedule C with their tax returns.

Neither of these programs handles payroll or other common business tasks such as purchase orders, price estimations or information tracking on customers and clients. For that you need a full-featured small-business financial program.

The best-selling financial program designed specifically for small businesses is QuickBooks Pro (https://www.quickbooks.com) from Intuit. This accounting program also handles invoices, payroll and numerous other financial tasks.

If you’re new to small-business accounting or even new to small business, you’ll like the way QuickBooks gets you started. It makes very few assumptions about your knowledge of computers, software or running a business. It begins by asking you basic questions about your business and, based on the responses, sets up a business profile that includes a set of standard categories for expenses and deposits. You can modify these, but this is a good jumping-off point.

Like personal finance programs, QuickBooks lets you track multiple accounts, including for checking, credit cards and income. And while the program can be used to generate paper checks, it can also hook you up with online banking and credit card transactions with participating financial institutions.

With online banking, you can issue payments, reconcile accounts and verify balances directly from within QuickBooks. You can also see almost immediately which checks and credit card transactions have cleared--you don’t have to wait for a monthly statement. It’s a good way to keep track of employee use of company credit cards and a very nice way to see business expenses you might otherwise miss. Best of all, it saves you a lot of extra typing at the end of the month.

Employees will be glad to know that the program also allows a business to set up online direct deposit of paychecks. That saves the company the hassle of writing checks and saves employees from spending time at the bank. Another option is to use the new QuickBooks Online Payroll Service, which, for a fee, will pay employees and payroll taxes for you.

I use Quicken 99 to manage my home-based business and am annoyed whenever I make a deposit, because the program doesn’t let me print the deposit register, let alone create a deposit slip. That was also the case with QuickBooks until this year, but the program now generates deposit slips (on special forms) or deposit summary reports. That’s a major time saver for anyone who has to deposit lots of checks at once.

Speaking of printing, the program prints all types of business reports, including what you’ll need when you apply for loans or fill out tax forms. It also prints W2 and 1099 forms and reports and transfers data directly to Intuit’s TurboTax for Business tax preparation software.

As an integrated accounting package, it also takes care of things that might otherwise require special programs. A built-in timer, for example, lets you keep track of how long you spend on a task or a particular client’s account so you can charge for your time. Data automatically flow to create an invoice or credit an employee for time spent. The program also lets you attribute specific purchase orders to customers and vendors, and there is now better integration between QuickBooks and Microsoft Word and Excel. The Word integration lets you generate pre-written and pre-formatted business letters such as thank-you notes, collection letters and more.

The program now has the ability to create mailing labels, which can be sorted by ZIP Code before mailing. Not only is it handy for sending out bills, it can be used as a marketing tool to send out mailings to customers and clients.

Not surprisingly, QuickBooks 99 has an Internet component. In addition to online banking and payroll, the program comes with services you can access over the Web. Through https://www.quickbooks.com (which you can access even if you don’t own QuickBooks), you can use “QuickBooks Professional Advisors,” which includes independent accountants, bookkeepers, computer consultants and trainers. You’ll gain access to lenders, get technical support and be able to buy supplies and upgrades directly from Intuit. Needless to say, there’s a fee attached to many services and the lenders and professional advisors have a business relationship with Intuit. Before buying or contracting with any services through QuickBooks.com, I recommend that you shop around for other options, including small businesses in your community.

The program is user-friendly. Still, when transferring to any new accounting system, it’s important to allocate time to work out kinks and think through how you want to set up accounts.

Lawrence J. Magid can be reached via e-mail at larry.magid@latimes.com.