photo credit: alancleaver_2000

She needed to be able to pay for the accounting system on monthly basis because she cant afford to purchase a brand new system which requires a huge up front capital investment. There’s simply not enough funds to go for a high end accounting package for now.

Also, she needed her accounting system to be online / web based so that she could easily share her accounts with co workers who are based at various locations.

Based on her requirements, I searched around and discovered one which fits exactly what she needs. It’s called SalesOrder.com

The reason why I have no doubts recommending SalesOrder.com is because it provides a 30 days full functionality free trial. If it doesn’t fit her requirements, she can just cancel the account without any obligations whatsoever.

But if it does the job well, then it costs just $47 a month for 1 user or $97 a month for up to 3 users. Really quite affordable for startups I would say.

SalesOrder.com is actually an ERP system for small businesses. So it not just an online accounting system but an ERP which includes some of the following modules as well:

• CRM
• Job Tracking
• Sales Management
• Cash Management
• Supplier and Purchasing Management
• Products and Services Management

Oh wait! In case you’re wondering if the costs I mentioned above are for the entire ERP suite, yes it is!

In today’s post, I would like to focus on SalesOrder.com’s comprehensive business accounting features.

One capability that caught my attention is its ability to generate all sorts of accounting reports such as the profit and loss report, balance sheet, statement of cash flows and many other types of reports.

Its multi currency feature allows you to enter details of your businesses no matter what currency they may be as it can be tied to exchange rates. Beats having to convert amounts manually.

One of the most complicated part of an accounting system has to be its tax management. SalesOrder.com makes managing VAT and sales tax easier and simpler.

These are some other notable accounting features:

• Cash flow forecast
• Credit management
• Drill down reports
• Ability to export to Excel
• Bank and credit card reconciliation
• Automatic balanced entry checking

Beside these features, the fact that the application is hosted on the cloud means that my friend don’t have to worry about the technical setup, patches, upgrades, security. All these are managed by the SAAS provider and we as the users just need to focus on our core business while leaving the technology maintenance to the experts. Another good point to consider.

Some sample SalesOrder.com screenshots:

For more info about this affordable web based online accounting system, check out the Small Business Accounting Software from SalesOrder.com today!

Before looking at appropriate depreciation rates, we need to first discuss the theory and reasoning behind the need for depreciation calculation in order to give you a better understanding of the overall objective of doing depreciation calculation.

The guidelines of generally accepted accounting practices globally require of accountants to comply with some principles, and one of them is the matching principle. This would mean that an accountant cannot show income this year that is not yet earned.

Let’s take a very simplistic example to illustrate the concept. If for example a 5 year contract has been allocated and money is received in advance by an organization, only the income that pertains to what is earned in the first year would be allocated within the Income Statement for that first year, regardless of when the cash was physically received. Cash received in advance of it being earned, or cash received only after it had been earned, will not impact on when the income will be accounted for in the Income Statement.

The matching principle will require now of the accountant to match the expenses that relates to that particular income for that year accordingly, regardless of in which year cash were spent. In a simplistic example, if the company only did this one project, that was to stretch over 5 years, and bought assets in order to earn this income, the expenses would be matched with regards to its contribution to income over the 5 years.

Say in this example that all the assets were bought on the first day of the project and all the assets lasted exactly 5 years and contributed day to day in exactly the same way towards the project, in such a case all the assets would have been taken to the Balance Sheet at day 1, but at the end of the year one, 20% of it’s value would have been transferred to the Income Statement as an expense with the name “depreciation”. Each following year another 20% of the Balance Sheet value of fixed assets would have been transferred to the Income Statement and at the end of the 5 years the Balance sheet will have a book value of zero for all assets.

In real life however, the expected lifespan of various assets are different from one category to another, and thus the initial price of the asset needs to be spread accordingly, in order to comply with the matching principle. IT equipment typically has an expected life span of 3 years and therefore it is typically depreciated over 3 years exactly, being 33.3% per year. Furniture is expected to last longer, perhaps 5 years, and would therefore be more likely to be depreciated at 20% per year.

All assets however aren’t expected to contribute in the same way each year, and some are expected to lose their value gradually over a long time. In such a case it would be more appropriate to depreciate those assets not on the cost price, but on the book value. This will imply that the assets can stay many years with a book value on the Balance Sheet, with smaller and smaller portions of it being “expensed” to the Income Statement year upon year.

We have covered now some of the theory behind depreciation. In practice however, many accountants skip this process of assessing their assets based on its expected lifespan and contribution to income and simply look at what the taxman would allow them to deduct as wear and tear per category each year. This may simplify their tax calculations as it would result in a smaller difference between actual profit and taxable profit, although this is not the technical correct way of doing this. Also note that tax allowances may differ from one country to another.

In light of all the above, it is not possible to give a set list of prescribed depreciation rates per asset category, but it is possible to give some general guidelines. Companies who already have a fixed asset policy as indicated on their Financial Statements should continue depreciating in line with that policy unless something fundamental changed within the organization. This is important in order to ensure consistency, which is another general accepted accounting practice principle that accountants needs to adhere to.

Although the straight line method of depreciation (writing assets off at a fixed % per year on the original cost price) and the book value method of depreciation (writing assets off at a fixed % based on the latest book value of the assets in the Balance Sheet) are popular methods of depreciation, there are other methods also available.

IT equipment would often be expected to last 3 years. If the cost price is spread exactly over 3 years this would result in 33.3% depreciation p.a.

Furniture would often be expected to last 5 years. If the cost price is spread exactly over 5 years this would result in 20% depreciation p.a.

Equipment would often be expected to last 4 years. If the cost price is spread over 4 years this would result in 25% depreciation p.a.

Books and very small assets are typically expected to contribute to income of the organization only in the year it was bought and would often be taken directly to the Income Statement in that year.

Yolande Kleynhans
(yolandek ‘at’ mtn.blackberry.com)

The IT manager has a need to ensure that IT equipment is managed well, that the organization always knows how much of what is available, how old each item is, what its value is and where it can be found. The General Manager needs to know the same for all assets, including furniture and office equipment.

The task of the Accountant however, is to provide depreciation entries in the books every month, and to keep track of the book value of each asset after accumulated depreciation has been taken into account . The method of depreciation is not the same for all organizations. The potential of the asset to contribute towards earnings need to be matched with the cost of the asset in the most effective way in order to comply with Generally Accepted Accounting Practices (GAAP).

If for example the life-cycle of an asset is only expected to be 3 years (as is usually the case with IT equipment), and the asset is considered to contribute towards earnings the same every month, then the value of the asset will be depreciated at a fixed rate of 33.3% per year.

An asset that is expected to last longer, but to contribute less and less towards earnings as it ages, may for example require depreciation at 20% per year, but on the book value. This will require that every month after depreciation has been calculated, that the book value will need to be recalculated again, in order to know the new book value to be used towards the following depreciation calculations.

These calculations may be quite straight forward if there are only a few assets, but as soon as there are many assets in one category, with new ones being sold (some at a profit and some at a loss) and additional ones purchased each month, the depreciation and accumulated depreciation calculations becomes more complex. It is however important for auditing purposes that it is done accurately and that records are available of how the calculations were done, hence the need for software to take care of this automatically. Some accounting software includes a separate module to keep track of this.

Here is a list of some fixed asset management software that allows for depreciation calculations:

• xAssets
• Asset4000
• BankTEL System (Fixed Asset Management for Banks)
• DepreciationWorks
• Intuit
• MoneySoft
• Paragon System
• Pro-Ware
• Red Moon Solutions
• Fixed Assets CS
• WorthIT Software

* Updated 19 Jan 2010. This article is continued at List of fixed assets and their appropriate depreciation rates.

Yolande Kleynhans
(yolandek ‘at’ mtn.blackberry.com)

Today we will be looking at some more options of free open source accounting software available.

• Front Accounting includes enterprise resource planning (ERP) elements and is web-based.
• It is suitable for small to medium companies.
• It supports multi-currency and multi-branch companies.
• Software requirements: Apache, PHP 4.3 or 5.MySQL 3.1

• Sadhanasoft’s Aqura Lite provides for multiple companies to be created and custom vouchers and it comes with a built in tutorial.
• It also offers more than 100 reports, each having various options for customization.
• Please note however that the Aqua Lite (the free version) does not have all the functionalities of the full Aqura version.
• It works with Windows but not open source.

• Ledger is developed using Delphi and is a basic desktop application accounting system which is easy to use and install.
• Windows based, but for Windows Vista some small changes to the BDE configuration is required before the program will run.

• OneStep Accounting is designed for small to medium sized companies which includes report designing functionalities.
• Runs on Windows
• Available for free but not open source

• QuickBooks accounting software has different versions. The Simple Start Free version tracks up to 20 customer and vendor contacts.
• QuickBooks includes online banking, manage payroll and payroll taxes.
• Runs on Windows and is not open source.

• Tryton is more than merely an accounting software package and is rather considered a business solution.
• It is a fork of the version 4.2 of TinyERP (later called OpenERP).
• Available on Linux, MacOS and Windows

• Suitable for small and medium business.
• It is web-based.
• It is available as a stand alone application or also as a set of modules for eGroupware.
• Runs on Apache, PHP, MySQL

• WebERP is a popular accounting / ERP web-based open source application for small to medium-sized enterprise.
• It is multi-language and allows for multiple currencies.
• The latest version was released on 8 Nov 2009.
• It is rich in functionality and even includes serial tracking capabilities.
• Runs on Apache, PHP, MySQL

It is still important to look at a demo of potentially suitable free open source accounting software for enterprises before making a final decision.

The look and feel should be considered, the speed of the software, as well as security considerations such as the possibility of password protection.

As businesses grow and more functionality may be required at a later stage, it is good to go for a solution that allows for such future growth. For example, if only services are delivered, and later on inventory are being sold as well, it would be a frustration if the chosen software solution does not allow for inventory control when the business eventually needs it.

The same consideration should be given to the number of users allowed on the system simultaneously.

Yolande Kleynhans
(yolandek ‘at’ mtn.blackberry.com)

* Updated 1 Feb 2010: Check out this new post regarding an affordable web based online accounting system.

In this article we will be looking at professional Accounting software specifically and will highlight some of the popular open source products on the market today, their functionalities as well as the systems they run on. Please note that an accounting system may include impressive functionalities, but it is also important to consider whether the business owner would be able to use it when comparing functionalities of various options.

Other considerations when comparing free open source accounting software is the speed of the program, how many users can use it at the same time, if the program allows for multiple companies, departments or cost-centers (where this is important), whether the program is considered relatively bug free and whether it is web-based or not.

If you consider implementing one of these software solutions, please check first which other software in your organization would needs to be imported into this program and confirm whether such imports would be possible with the desired accounting software solution.

Usually with free open source Accounting software, the software provider will make his profits by providing professional training, consultation or manuals for the software at a fee. Some even receive donations.

Here follows a list of free open source Accounting software that could be used in a business:

• GnuCash is ideal for small businesses and is a desktop application for Linux, Windows and Mac OSX.
• Includes graphs and scheduled transactions.

• TurboCash is a windows desktop application suitable for small businesses with more than 70,000 users.

• Before Lazy8 Ledger was only compatible with Sun-Java but now it will work with OpenJDK which is the standard Java in Linux distributions.
• Available for Mac, Windows and Linux.

• For small business and personal use.
• Not very rich in functionalities yet.
• Runs on PHP.

• Rich in functionalities within the various accounting modules that is covered and can handle multi-currency, multi-department and multi-company organization’s accounting.
• Includes graphs and provides for scheduled transactions. It is also web and email enabled and provides for full employee records.
• Runs on Windows.

For some more information on free open source accounting software, please read Part 2 of this article tomorrow.

Yolande Kleynhans

(yolandek ‘at’ mtn.blackberry.com)

* Updated 1 Feb 2010: Check out this new post regarding an affordable web based online accounting system.

I believe many have benefited from this open source tool. The only drawback about BambooINVOICE is that you will need to download the source codes and attempt to install it on your own web server.

Since this is a web based application, the installation process isn’t as simple as installing a desktop application where we just need to click next to everything and the application installs automatically.

In order to install BambooInvoice, you’ll need some experience with php, apache, and mysql. Of course you could also depend on web server packages like XAMPP to cut down on the installation steps.

But if you do not have any prior experience with any of these web installations, then you may have some difficulty trying to use BambooInvoice. If only there’s an option whereby the app is hosted on their servers for people to use, just like Google Docs.

If you currently need a free web based invoicing tool without the hassle to install and manage servers, then Sage’s Billing Boss is the right tool which caters for all your invoicing needs.

Billing Boss is a free online invoicing tool designed for small businesses and freelancers.

These are some key features of Billing Boss:

• Manage invoices (create, edit, delete invoices)
• Accept online payment (Paypal, Sage Card Services, Credit Cards)
• Share data (invite your accountant to view your invoices)
• Web based (access from anywhere)
• Mobile version (compatible with iPhone and Google G1)

Since Billing Boss was free to sign up and use, I gave it a quick try. In less than a minute, I had access into Billing Boss and this is what I tried out.

1. Created a new invoice
2. Added a new customer
3. Saved my invoice
4. Applied a new style on to the invoice
5. Sent the invoice to a client (own email) and received it successfully
6. Saved the invoice as a PDF for records purposes
7. Recorded a payment for the invoice
8. Viewed invoice report
9. Viewed payment report

After trying out Billing Boss, I’m confident that it works well and gets the job done. This tool is highly recommended for those who are still manually managing their invoices via Excel or Word invoicing templates.

So for those of you who would like to send out an invoice in within the next couple of minutes, Billing Boss is your hassle free online invoicing and billing tool.

The reason why he needs it to be web based is because he’s always on the run servicing clients. Being able to generate and manage his invoices online is a good way to keep all his invoices at a central location. No longer does he need to worry about backing up his pc in case of a hard disk crash, theft, etc.

I did some internet research and found out that there is indeed a web based invoicing software he could use and it’s called BambooINVOICE – a free open source invoicing software intended for small businesses and independent contractors.

BambooINVOICE is a web application that is released as an open source software (GPL). In order to use it, the application has to be set up in a web environment (Apache, PHP, MySQL).

Before setting up the application, I gave BambooINVOICE a try myself and found it quite good and comprehensive enough to get the job done.

I started off by logging into the demo system.

The first page shows the following:

From here I could manage invoices, clients, reports, tweak settings, accounts and utilities.

I headed on straight to create an invoice just to see how it looks.

I had the option to either select an existing client or create a new client. In my case, I created a client called Wareprise.com.

Clicking on the Create Invoice button shows the screen below.

After entering all the required details such as the item description, quantity and price, a final amount is automatically calculated for me. Also not that I could add new line items simply by clicking on the new item button.

Once done, clicked on the create invoice button to save and actually create the invoice.

It’s really simple to create an invoice with BambooINVOICE. From time to time, you could login to the system again to view a list of all your invoices. (Click to enlarge)

Let’s say someone makes a payment, all you need to do is to click on the Invoice number to update the payment amount for the invoice.

Note that the payment is made for just one item so the status is still kept as open. At the bottom of the screen is a payment history for you to keep track of all payments made.

Once all payment has been received and recorded, the status of the invoice will be automatically converted to closed.

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So that’s a simple walk through on how BambooINVOICE works. Hope you like it! I’m sure my buddy does.

With the recent credit crunch that’s affecting many countries today, most need to be extra careful with their personal finances. If your finances is really tight, you might need to think twice before deciding to go for a:

• New car
• Sweet home theater
• Guys night out
• Posh tropical vacation

For some, they just choose to have a very simple life and forgo many of the desires above. But for those who are really tight yet still want to enjoy life once in a while, they can still do it by managing their personal finances better. There are a few basic and important rules to follow :

• Spend less that you earn
• Be prepared for the unexpected
• Make the money you have work for you

The next step to this is to really track every single expense and earning. To do that, I would suggest that you utilize a personal finance software to assist with the tracking.

The following are a list of personal finance software to begin evaluating and consider using on a daily basis:

• Mint
• GnuCash
• YNAB

But these days, there are many personal finance software to choose from. Each one has it’s pros and cons and depends on your exact requirements. The best way to easily compare and evaluate which software suites you best, check out Personal Finance Software Reviews for thorough reviews and walkthrough of the many software applications available for managing personal finance.

My sister who just started her very own music school told me that she found the list of accounting software quite interesting as she was trying to manage her accounts for the music school. The two software which she considers to be able to fulfill her requirement are MYOB and Kashflow.

However, she mentioned that allthough both the accounting software are award winners, there is still a price tag to it which she cannot afford for now. At the moment she is using just the windows notepad to keep track of all her sales and expenses. Then I asked her, don’t you have Excel? And she said nope!

She then asked if there is a better and easier way for her to manage her accounts in a more organized way and most importantly be able to auto calculate various figures which notepad can’t do. Initially i thought of telling her to download OpenOffice which has Calc similar to Excel. But then I thought, maybe there is an accounting package out there which is free and easy for her to use.

Searching through the Internet, I found a feature packed and free alternative to MYOB and Kashflow called Microsoft Office Accounting Express 2009.

With Microsoft Office Accounting Express 2009, she can fullfill the following accounting needs:

• Create quotations
• Create invoices
• Create receipts
• Track expenses
• Reconcile online bank accounts
• Track time spent by her employees
• Store information related to customers, contact, vendor and employees
• Generate reports
• and many more features..

Once I downloaded the application and installed it, I went over to her music school and showed her what Microsoft Office Accounting Express 2009 could do.

Immediately she could see how this accounting software is able to help her manage many aspects of her business accounting. To simply illustrate, see a comparison of what she can do with notepad against Microsoft Office Accounting Express 2009.

FROM

TO

So many features you shouldn’t run your business without it.

If you’re still managing your business without an accounting software, Microsoft Office Accounting Express 2009 would be a great start. Download this free alternative to MYOB and Kashflow today!

But do you know which ones are really good? One way to find out would be to search for the common ones and evaluate them one by one. Another way would be to go for those which have won awards such as the Sift Media Software Satisfaction Awards 2008.

The awards are based on the views and satisfaction of genuine buyers and end users of the business software applications itself and was not awarded by a panel of judges. Who else should vote for the software if not for the end users themselves. Only they will know best when it comes to the usability of the software.

So here you are, the 2008 award winning small business accounting and finance software goes to:

The difference between KashFlow and other accounting software products is simple: KashFlow was designed by small business owners, to be used by small business owners.

With KashFlow you can be assured of 3 simple aims:

1. The software is easy to use thus making accounts more simple and less stressful
2. Minimized time spent on accounting through its various automation tasks
3. Commendable level of service

Start your 60 day free trial today. Did you know that you’ll also be getting a free ebook containing 52 Simple Marketing Ideas for your small business.

MYOB Accounting Plus is business, payroll and time billing software that streamlines key business tasks. Accounting Plus has the same business management features as MYOB Accounting with the added feature of helping you meet your payroll obligations. This software is best suited for an organization with 20 or less employees so you can easily track the details of each jobs and services carried out by the employee.

Take a test drive of MYOB Accounting Plus version 18 and get a good feel for how it can help your business. Enter some transactions, print some reports, and make some mistakes just to see how easy it is to correct them. The MYOB test drive pack is aproximately 127MB.

Intuit QuickBooks Pro Edition 2009 is a small business accounting software which helps you focus on growing your business and stay on top of every dollar in and every dollar out while organizing all your finances in one place. With this software, you can easily manage cash flow, track invoices & monitor spending, stay competitive and attract new customers—includes free website.

Some key features of Intuit QuickBooks Pro Edition includes tracking sales and expenses, pay bills and print checks, export data into excel, create purchase orders, sales orders and track back orders and many more.

There is also a web based version called QuickBooks Online which is similar to QuickBooks Pro allowing you to create invoices, pay bills and track expenses when and where you want.

Sage 50 Accounts 2009 is packed with features to help keep your business truly organised and ensure you get paid on time. As well as improving cash flow, it also helps to manage your other day-to-day finances – everything from VAT returns to year-end accounts. So you’ll be more in control of your finances and be able to free-up time for other areas of your business.

Sage 50 Accounts helps you to take care of your finances and cash flow, easily create invoices, look after products and services, get the most of your customers and suppliers and create accurate management reports.

e-conomic is an online and innovative accounting system that exploits the opportunities of the Internet for flexible, user-friendly solutions. Fulfils both the individual and the general requirements for a company’s accounting and financial management.

e-conomic’s tagline – Accounting made easy. e-conomic is an online accounting system specially developed for small to medium sized organization. With e-conomic, you can easily create invoices, perform bookeeping and budgetting once you have selected your default setup.

You can try a test run of e-conomic and it’s specially designed for those in Denmark, Norway, Sweden and the UK. The full access trial version can be accessed for 2 weeks without any limitations.

Mardak focuses on developing and providing software solutions for the construction industry to enable total efficient management of a construction company’s financials and accounts.

Mardak Construction Accounts (MCA) has been specifically written for the construction and building industry. The software is a fully integrated solution which fulfils the industry’s bespoke accounting requirements such as working with Subcontractors.

The product has been designed to reduce administrative processes and time required wherever possible. Document management is available to replace the traditional need to print, file and archive documents, saving both time and money.

Some key features includes contract / job costing, project accounting and financial management, subcontractor management and many more.

Mamut Enterprise is an all-inclusive integrated small business software solution including accounting, CRM, salesforce automation, logistics, e-commerce, and services at unparalleled value for money. This small business software solution helps small businesses opearte more effectively by focusing on sharing information, maximising efficiency, lowering costs and increasing revenue. Mamut has won numerous awards for its functionality and user-friendliness.

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Here you go 7 small business accounting and finance software for your company to evaluate.