| A small business accounting program should | | | | business forms that small businesses commonly |
| accomplish three tasks: track income and | | | | need to produce include invoices, credit memos, |
| expenses, generate business forms, and keep | | | | monthly statements, purchase orders, and so |
| detailed records for other assets and liabilities. | | | | forth. |
| Tracking Income and Expenses | | | | If you have a small business with very simple |
| The task of tracking a business's income and | | | | form requirements-perhaps you need only |
| expense is really the most important job of an | | | | checks-then the Money program may work very |
| accounting system. If you own or manage a small | | | | well for you. |
| business, obviously, you need some tool for | | | | However, if you have extensive or complicated |
| measuring your income and your cash flow. | | | | business-form requirements, a more full-featured |
| Although Money does little more than keep a | | | | small business accounting package, such as Intuit's |
| checkbook, you can actually keep financial records | | | | QuickBooks or Peachtree's Complete Accounting, |
| for a business right out of a checkbook. To do | | | | will do a better job for you. |
| this, you simply categorize deposits as falling into | | | | NOTE If you produce more complicated forms, |
| some income category. And when you write a | | | | but you produce these other forms with a word |
| check or make some other withdrawal, you | | | | processing program, then the Money program |
| categorize expenses as falling into some expense | | | | may still work for you. |
| category. | | | | Detailed Record Keeping for Other Assets and |
| One problem with using a checkbook program | | | | Liabilities |
| such as Money, however, is that by using a | | | | The third task that a small business accounting |
| checkbook program, you are implicitly using | | | | program should help you with is detailed record |
| cash-basis accounting to track your income and | | | | keeping of your most important assets and |
| expenses. | | | | liabilities. A checkbook program lets you keep |
| NOTE Cash-basis accounting counts income when | | | | good detailed records of cash, and for some |
| you receive a deposit and counts expense when | | | | businesses that is the principal asset. But many |
| you write a check. | | | | small businesses have other significant assets and |
| Cash-basis accounting is easy to understand, and | | | | liabilities they need to track, for example, |
| that means you are less likely to make errors in | | | | accounts receivables, inventory, and vendor |
| implementing it. However, cash-basis accounting is | | | | payables. |
| generally too imprecise for more complicated | | | | Whether or not Money's accounting tools-its |
| businesses. If you use inventory in your business, | | | | check register-provide adequate asset and liability |
| for example, cash-basis accounting isn't very | | | | record keeping depends on the situation. |
| accurate-and the Internal Revenue Service does | | | | However, no small business accounting program |
| not allow it. And there are other circumstances, | | | | does everything you need it to do. Any |
| too, in which cash-basis accounting produces | | | | accounting program that provides an extensive list |
| serious and usually unacceptable errors in precision. | | | | of features, by its very nature, becomes a |
| For example, if you often receive money before | | | | challenge to use. For example, moving to the |
| you have actually earned it or if you often incur | | | | accrual basis of accounting adds an entire layer of |
| expenses long before you actually have to pay | | | | complexity to financial record keeping, and |
| for them, you need to use a more sophisticated | | | | keeping detailed records of inventory adds |
| accounting program than a checkbook program. | | | | another layer. |
| The second task that a small business accounting | | | | For these reasons, even when Money doesn't do |
| program should help you with is the generation of | | | | everything you need it to do, your best choice still |
| business forms. The most common business form | | | | may be to use Money-and then simply live with |
| is simply a check. And of course Money and any | | | | its shortcomings. |
| other checkbook program help you do this. Other | | | | |