Working at an online accounting provider has given me an insight into some things that you may wish to check. This article is written with the view that the company buying the SaaS accounting app is a small sized business owner or decision maker.

Data Storage:

Where is your data stored? In today’s world we are more than happy to submit our data to online stores, surveys and hold our email conversation data in the cloud. The majority of the time your data is going to be securely held on a securely housed server either in house or by a third party like Amazon (for example). However you should always be careful to check that the server is monitored 24 hours a day and has limited personnel access to the server (for large third party providers this will be the most basic level of protection). Another thing to consider is if the data is stored on a self hosted server, you need to make sure the data is backed up off site as well. I am not an expert in the way that data needs to be stored; however I do know that these are a few factors to question before subscribing to a small business accounting service.

Customer Support:

This is one of the factors that comes down to personal preference and confidence in your IT skills (the fact that you are reading this blog suggests you are pretty confident). If you feel that the app has great help documents and email support then you may feel that telephone support is a nicety rather than a necessity. On the other hand if you are not that confident with how to use the online accounting software then telephone support would probably be higher on your list. Email and telephone support are two very different solutions in my opinion; email is great if you are not in need of an urgent response and you’re not so confused that a step by step walk through be required. Telephone support is not as flexible for the busy professional, but if you are stuck with how to do something on a small business accounting app then you can be talked through it whilst at your computer. In the future I have no doubt that remote assistance will become part of developing an app.

App Design & Usability:

This is one area of choosing a small business accounting solution that is completely down to you, the decision maker. The only way to decide which piece of accounting software is right for you is to sign up for several providers and see which accounting solution you and your co workers or employees find easiest to use. You also need to take into account whether the software provides the features that allow you to record the financial happenings in your company on a day to day basis.

Pricing:

Pricing of a Saas accounting software varies hugely depending on the scale of implementation. At the cheaper end of the market (being considered here for businesses of up to 25 people) there is quite a large variation in pricing (anything from $6 – $50 or more) so below are two things to look out for:

• Is the price inclusive of all the services you may need or are you going to need to buy additional features. Examples of these additional features could be importing a certain type of file to allow you to get your bank data up to date, or having to pay to produce your end of year reports.
• How many transactions are you allowed a month (unfortunately the definition of a transaction varies from provider to provider).

Written by Nick Braithwaite

Clear Books is a provider of small business accounting software.

The original post is published here: Points to consider when choosing online accounting software

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!

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The original post is published here: An affordable web based online accounting system

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.

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The original post is published here: List of fixed assets and their appropriate depreciation rates

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)

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The original post is published here: List of fixed asset depreciation calculation software

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.

The original post is published here: List of free and open source Accounting software (Part 2)