It's funny how quickly we adapt to new technology. Just a bit over two decades ago, Ken Olsen, the president of then-giant minicomputer vendor Digital Equipment Company, wondered, "Why would anyone want a computer on their desk?"Today, pretty much everyone has a computer on their desks, and DEC is long gone, having been bought by Compaq, which in turn was acquired by Hewlett Packard.

Back in the DEC days, accounting software was widely available, for many thousands of dollars and months of installation and implementation. Today, anyone with a few hundred dollars can walk into Costco, Staples or numerous other stores and purchase a much more powerful accounting system than what was available then for most minicomputers.

The interesting thing is that as accounting software has dropped in price, it has gotten more powerful, offering features that were only dreamed of 20 or 30 years ago.

One thing that hasn't changed much over the years, however, is that properly setting up a company on an accounting system is still not a task for the uninitiated. Your clients can buy a system for very little money, but for it to be used properly, effectively and efficiently, chances are that you will have to add your two cents, either during the set-up or afterward, to correct installation and configuration problems.

Still, for a great many businesses, low-cost, off-the-shelf accounting software is the best way to go. It's available, affordable and doesn't require an information technology department to keep it running. There are some caveats for certain kinds of entities, but for the most part, many of your clients will find one of these packages a very viable solution.

One size fits a lot

For years, some industry pundits have been predicting the collapse of the low-cost accounting market. One reason is the high cost of support - and inexperienced users need a lot of it. Vendors have responded by instituting pay-for-support plans, so that providing this needed support doesn't wipe out any profit from the initial software sale.

Accounting software, as with many other applications, has evolved over the years. Today's low-cost accounting applications push the entry-level boundaries pretty far, providing sophisticated reporting options, on-the-fly account entry, easy-to-use flow-chart-style navigation, and input efficiencies such as auto-fill.

Many of these features, including executive dashboards, have appeared first on low-cost accounting applications, and then migrated to more expensive client/server software.

Deciding exactly what characteristics define low-cost accounting software is a lot like nailing jelly to a tree. There are differences between a package that is available for a few hundred dollars off the shelf and a mid-market solution available only from a value-added reseller costing thousands of dollars. One difference, of course, is price. Another is ease of installation, configuration and implementation, and ongoing ease of maintenance. Frequently, the more expensive an application is initially, the more likely it is that it will prove to be more expensive on an ongoing basis.

In many cases, this higher acquisition and ongoing maintenance cost is justified. More expensive software usually provides scalability, or the capability of adding many more simultaneous users, as well as specialization for specific businesses, such as manufacturing, warehousing and distribution.

At the lower end of the cost spectrum, most vendors take a "one-size-fits-all" approach, making their applications generic enough to meet the requirements of a wide variety of business types and sizes. There are some differences between packages, however, which is why the market continues to support a number of vendors and diverse product lines.

Many of the major differences are in the areas of inventory, payroll, the ability to retroactively change transactions, and in the number and type of ancillary services that are provided by the software vendor or third parties. These are discussed in the individual reviews.

Here today, gone tomorrow

Feature "creep" isn't all upward from low-cost applications to more expensive ones. Many of the features offered by mid-range accounting applications do find their way down into the less-expensive accounting offerings. The need to continually upgrade the feature set of low-cost applications has had its cost.

Over the years, this part of the accounting software market has lost a number of vendors and products. Many familiar products have either gone away, like Peachtree's One-Write Plus, or been redirected in the marketplace. Sage's Simply Accounting is an example of this. The more feature-filled versions of this product are for sale only in other countries, where the larger number of the product's users reside. Here in the U.S., only the most basic version of Simply Accounting is available. It's still a pretty powerful product, but it's now positioned to compete with Quicken and Money, rather than with the products reviewed here.

DacEasy is another example. This was the first "do-everything" solution offering in the microcomputer software industry, introduced at a rock-bottom price. Today, Sage still sells DacEasy, and, in fact, just introduced an upgrade for it. The software is no longer targeted towards new users, however - Sage is just trying to keep its huge DacEasy user base happy with upgrades.

Even with this attrition and consolidation, don't be quick to write off the low-cost segment of the accounting software market. Sales continue to remain robust. In fact, the past year was marked by Microsoft introducing a new low-cost accounting system - Small Business Accounting.

Putting them to the test

We examined a quartet of affordable accounting systems. Three of these, from Intuit, Microsoft and Sage, are available at retail from a large number of outlets. The fourth package, from MYOB, is sold direct, either from the vendor or by a network of resellers. It is priced in the same range as the other packages and offers a similar feature set, which is why it is included in this round-up.

For each of the packages, we installed the software and, using one of the sample companies supplied by the vendor, added customers, vendors and accounts. We entered transactions, printed reports and evaluated any new features implemented in the current release.

Our test platform was a moderately powerful Intel-based PC running at 3GHz with 1GB of RAM, a Western Digital 300GB hard disk, and a Lite-On dual-sided DVD burner. While none of the packages reviewed actually require this powerful a PC, if your client plans to run in multi-user mode, having a fast PC and hard disk drive will give them better performance when more than one user is accessing the application.

Keep in mind that for production use, any PC running a mission-critical application such as an accounting system should always be as reliable as possible, attached to an uninterruptible power supply, and backed up on a regular basis.

Intuit QuickBooks Premier 2006

You have to give Intuit a lot of credit. As an accountant, you know how intimidating computerized accounting can be, even for an experienced bookkeeper. With the introduction of Quicken, followed by QuickBooks, Intuit has settled a lot of that "accounting" fear.

The way that they have gone about this is to emphasize the tasks that need to be performed, rather than the ancillary applications and ledgers such as accounts receivable. Yes, QuickBooks is a real double-entry accounting system - you can even enter general journal entries when necessary.

But for the most part, your clients won't have to. Rather, they will enter and pay bills, create invoices and sales orders, and receive payments. Intuit's approach was to target its software to business owners and users, not accountants and bookkeepers. In return, it has been rewarded with a substantial share of the low-cost and entry-level market.

This user emphasis is apparent during the initial set-up, with a walk-through interview that helps a user select and configure the appropriate chart of accounts and other application settings. This directly influences the appearance of the software when it runs. For example, if your client doesn't record time for their employees, or perform payroll within QuickBooks, those tasks won't appear on the flowchart navigation panel. This customization is performed automatically, but your client can also eliminate or add icons to the top menu bar to make it easier to use.

Depending on which edition your client purchases, running the application in multi-user mode is just a matter of purchasing additional user licenses. We reviewed the top-of-the-line Premier 2006, but Intuit offers less expensive editions all the way down to the very basic and inexpensive Simple Start. Also available are industry-specific versions of QuickBooks Premier, such as editions for contractors, manufacturers and wholesalers, nonprofits, accountants, professional services, and retailers. These editions are geared towards the particular market, but are not true vertical market applications.

Topping Intuit's lineup is the Enterprise Solutions Edition, a 10-user application for QuickBooks users who are satisfied with Pro or Premier features and ease of use, but require a greater number of simultaneous users and greater transaction capability.

The current version keeps most of the features that we liked from previous versions, such as the one-click button to turn an estimate into an invoice. (Of course, this is actually more than one click, as the process asks you if you want to apply the entire estimate to the invoice, or just part of it.)

The navigation flowchart is more streamlined, has the entire task flow for the application visible, and, as mentioned earlier, is customized by the client's responses during set-up. Other new features include a very tight integration with Office - you can use Word to customize reports, generate mail lists and client letters, or export reports into Excel for specific analyses not included in the application. Outlook appointments and contact additions can also flow into your client's QuickBook lists.

Intuit has not substantially changed the inventory-costing methods available. It still offers only weighted average and specific costing. The inventory has been enhanced by an "Available to Promise" feature in the sales order task group that allows your client to distribute available inventory to fill ongoing orders in the most profitable manner, or according to other parameters, such as giving specific customers priority.

Payroll is not included, but there are three different add-on QuickBooks payroll packages -- QB Standard Payroll, QB Enhanced Payroll and QB Assisted Payroll. Intuit also sells its own online payroll service, or your client can use any of the popular service bureaus, most of which offer integration capability with QuickBooks.

Microsoft Small Business Accounting 2006

Microsoft is very much aware of what a profitable and desirable market accounting software represents. In the mid-market accounting software arena, it bought Great Plains Software, Navision and several other accounting software vendors. On the low-cost end, it has unsuccessfully tried twice to penetrate the market, first with Small Business Financials (formerly Small Business Manager), then with Profit.

Small Business Accounting is available in several versions. The base version provides only accounting functions, while the Small Business Management Edition also includes the Professional Version of Microsoft Office. SBA is very tightly integrated with Office, and you can access your accounting database to use Outlook for e-mailing and customer relationship management; perform custom analyses with Excel; edit reports and do mass-mailings in Word; and produce custom brochures and targeted promotional materials using Publisher.

To be honest, though, Microsoft isn't the first vendor to think of this. Seven years ago, Peachtree had a version of its software called Office Accounting that offered very tight integration, and most accounting software today works very nicely with Office applications. Still, Office does extend the Small Business Accounting package's capabilities substantially, and, as expected, the integration between SBA and Office is nicely implemented.

We found SBA very easy to install. This is a bit surprising, considering the problems we have had in the past with accounting applications using the Microsoft SQL Desktop Engine as an underlying database. Fortunately, SBA does the configuration for you, and it does so without user intervention.

A large number of boilerplate charts of account are available, and, as with most software at this level, an "interview" walks you (or your client) through the set-up and configuration. If your client is switching from another low-cost accounting system, SBA has an Import Wizard that will bring in the chart of accounts, as well as customers and vendors.

SBA's user interface is designed to be as familiar-looking as possible. Many accounting applications over the past several years have adopted the Microsoft Outlook/Windows Explorer interface paradigm, so Microsoft is right on target here. We found it easy to navigate through the application, with self-explanatory icons and pull-down menus.

As with the other applications in this round-up, SBA gives you a lot of latitude in customizing and formatting reports, statements and invoices. You can also use Word as an editor to make even more changes, if desired.

Microsoft's marketing materials compare SBA with the Pro version of QuickBooks and the Complete Accounting version of Peachtree Accounting. In a feature-by-feature comparison with these editions, Small Business Accounting is very much on a par. Unfortunately, SBA doesn't offer different editions to maintain parity with QuickBooks Premier or Peachtree Premium. This very much limits your clients' ability to move up as their accounting needs become more sophisticated. The features chart lists multi-user capability with the purchase of additional licenses, but a true simultaneous multiple-user version is currently not available.

Payroll is also not included or available as an add-on, though Microsoft includes instructions on how to maintain a basic payroll in Excel. Third-party payroll services are available from ADP, as is credit card processing. And, as with some other packages we examined, inventory costing is also limited - you can only use FIFO.

These limitations are not unique to SBA: Other vendors' applications at this price level have similar limits. At the same time, you need to wonder if Microsoft is really in the low-end accounting market for the long term. Given how competitive this segment of the market is, Microsoft has been pretty low-key in promoting the application, much less making any sort of growth path available.

If worst comes to worst, your clients can always export SBA data to another accounting system that offers an upgrade as the clients' needs change. It might make more sense, though, to just start the client out with an accounting system that provides a painless migration.

MYOB BusinessEssentials Pro v. 2

With a shrinking number of software vendors in the low-cost accounting marketplace, where do you go if none of the market leaders has a good fit for your client?

Unlike the other three vendors in this round-up, MYOB does not sell in the retail channel. Your clients (or you) will need to order it directly from MYOB, or purchase the software from one of the consultants in its reseller network. As with Sage Software's Simply Accounting, MYOB's accounting packages have a larger user base in other countries than they do here in the United States. Over the years, MYOB has expanded overseas, been bought by an overseas investor, and had the U.S. operation repurchased by its management.

The vendor offers several editions of Premier Accounting, as well as less costly accounting offerings and even several accounting applications for the Macintosh. BusinessEssentials Pro, the version we tested, is actually a suite of related and integrated applications with Premier Accounting at its core. As with the other applications reviewed in this round-up, Premier Accounting is a single-user package unless you purchase additional user licenses. MYOB allows you to purchase individual user licenses at $149 each, so if your client only needs two-user capability at the present time, they don't have to pay for a five-user license.

Premier Accounting includes the standard ancillary ledgers/ applications, including AR, AP and inventory. It also has a basic payroll, though if your client has a fairly complex payroll, you may want to advise them to examine MYOB's SurePayroll service bureau partner, or another service bureau such as PayCycle, Paychex or ADP.

Inventory is also basic, but very functional. It provides only weighted average or specific costing, though it certainly is not the only package that limits costing methods. To be honest, a large majority of small businesses will not find this particularly limiting. We like the ability to add an image into certain records, such as customer contact cards or inventory records. The inventory also provides basic kitting capability, so your client can set up subassemblies to automatically reduce the right inventory items.

BusinessEssentials Pro is actually a suite of applications. One of these is a human resources application called Staff File. Even smaller businesses can benefit from HR management, keeping track of sick and vacation days, employee evaluations and raises, and the like. Staff File lets your client accomplish this without the need to spend a bundle on a stand-alone HR package.

Also included in the bundle is an appointment manager and a financial forecaster. A copy of a logo creator is also part of the suite, though if your client comes up with a logo that they actually want to use, they will have to pay extra to purchase it. There's no charge, however, for creating the designs.

If you have a client or clients who want to try BusinessEssentials Pro (or Premier Accounting), you can get a free accountant's copy, so you can perform any need adjusting or closing entries. A trial version is also available from MYOB.

Peachtree by Sage Premium Accounting 2007

Of all the vendors in the accounting marketplace, Peachtree, now a division of Sage Software, is one of the true old-timers. It has been selling software since the dawn of the personal computer age, just about 30 years ago. Starting in an Atlanta storefront under the brand Retail Sciences and providing accounting applications that ran under the CP/M operating system, the vendor has grown with the years, sharing the greater part of this market with Intuit.

While both QuickBooks and Peachtree try and make their applications as easy to use as possible, Peachtree is still favored by accountants and their clients who prefer "real" accounting software, closely tied to a double-entry set of books. Of course, the current versions that Peachtree offers have all the amenities, including flow-chart-like navigation panels.

In prior years' round-ups, we always missed Peachtree's yearly update by a few weeks. This time around, however, we were able to get a late beta copy of the newest release. It does contain some major differences from the previous version. Two of the most noticeable are the navigation windows and the executive dashboard, which Peachtree calls its Business Status Center.

The navigation windows are a major change from the previous version. The prior version had a single integrated flowchart that encompassed pretty much all of the day-to-day tasks, from entering and paying bills to creating invoices, sales orders and receiving payments.

The new navigation pane has a leftmost vertical window containing icons for the various task groups (Business Status, Customers & Sales, Vendors & Purchases, Inventory & Services, Employees & Payroll, Banking, and Company), and you can create your own shortcuts to be added into this pane. A middle pane contains a flowchart for the specific task group chosen. A third rightmost pane has frequently used information. For example, if you are working with the Customers & Sales icon, this window would display a customer list, relevant graphs such as aged receivables, and the most recently used reports for the group.

Other new features include a list function that makes searching easier, enhanced integration with Excel that imports formulas as well as data, and a handy new comparative budget spreadsheet creator.

As in previous years, Peachtree Accounting comes in several different versions, with Complete Accounting and Premium Accounting available in multi-user editions. If the five-user cap proves a problem, also new this year is Peachtree Quantum, a 10-user version positioned to compete with QuickBooks Enterprise. As with Enterprise, Quantum is designed to provide a seamless upgrade path for Peachtree users who are happy with the software's functionality, but need to employ more simultaneous users and have more transactions.

Industry-specific versions are available, and include construction, nonprofits, manufacturing, distribution and an accountant's edition. Peachtree includes payroll as a feature, but also offers links to payroll service bureaus, as well as other third-party services, such as credit card processing.

Peachtree Premium Accounting, as with most of the Peachtree editions, continues to offer a comprehensive selection of inventory costing methods, including FIFO, LIFO, specific cost and weighted average. As with the other accounting systems that we examined for this round-up, you have a great deal of latitude in customizing reports, invoices and statements, and a copy of Crystal Reports is included that should let you easily accommodate your clients' ad hoc reporting needs.

Ted Needleman, a former editor of Accounting Technology, is a consultant and freelance writer based in Stony Point, N.Y.

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