Whether you choose a personal-finance package or a true accounting program to maintain your company's finances depends on your business. When making your decision, consider the following questions:
Do you operate on a cash basis? While a personal-finance program can easily track cash income and expenses, dealing with payables, receivables, or aging generally requires a more full-fledged bookkeeping or accounting program.
How many employees do you have? Tracking the government's requirements for payroll deductions calls for a system that will support separate "accounts" for withholding or unemployment insurance. While some personal-finance packages can be adapted to perform these functions
, a program specifically designed for the task will generally be more flexible and easier to use.
Do you have a large, changing inventory? If you need to track a large number of items, stock on hand, quantities ordered, and so on, you'll need a package that provides flexible inventory management. Accounting packages will be stronger in this area.
Do you deal with multiple customers or vendors? A true accounting package will provide more flexibility than a personal-finance package when it comes to dealing with a large number of customers and vendors.
Do you have an accounting background? Some packages require you to be familiar with standard accounting terminology like credits, debits, and posting. Others substitute plain-English phrases for accounting jargon, making it easier for non-accountants to set up and maintain the system.
Do you require a GAAP-compliant system? Generally Accepted Accounting Principles require such features as the inability to delete transactions (to maintain a
complete audit trail). For a small business, that may be an unnecessary and even bothersome feature.
From Checkbook to Balance Sheet
