Before the advent of the personal computer, computerizing a business' accounting was a daunting experience, costing thousands of dollars just for the software component. Many companies hired a team of programmers to either customize a "turnkey" system of hardware and software to their specific requirements, or to write their own accounting applications.All that changed when the first PCs hit the market.

Not far behind were the first affordable computerized accounting systems, such as the long-gone BPI Accounting. Most of the software companies from those days have also vanished, with the notable exception of Retail Sciences, the Atlanta storefront that morphed into Peachtree Software. Also still around from the early days is DacEasy Accounting; both of these now belong to accounting software giant Sage Software.

While many of the players have changed since then, what hasn't changed is the ability of a business owner to simply walk into a computer or office supply store, or even a warehouse store such as Costco, BJ's or Sam's Club, and buy an accounting system off the shelf for under $500.

This off-the-shelf accounting software is more powerful than anyone back in the early days of computerized accounting could even dream of. Guided interviews, wizards, drop-down menus, on-the-fly account addition, and context-sensitive help all make today's retail accounting software much easier to implement and operate than in years gone by.

Low-cost accounting software has also changed the way many accounting practices operate. While write-up is still a robust application, many former write-up clients have decided to bring bookkeeping in-house. No doubt some revenue has been lost due to this. Yet savvy accountants have been able to shift services by offering software set-up and support, as well as providing their expertise in making adjusting and closing entries.

NO SHOEHORN REQUIRED

Part of the attraction of off-the-shelf applications is that they don't require a lot of computer or bookkeeping expertise to buy, install, configure or use. Sure, many of your clients will eventually have you come in and fine-tune their set-up, but for many of your clients, getting up and running is relatively painless, and very affordable.

Software vendors have been able to keep acquisition prices affordable by breaking out support as a separate purchase. That's the area of greatest cost exposure to the vendor, and by pricing it as a service, they don't see their profits from the sale of the software eaten up by the cost of providing support after the sale. All vendors supply some additional support as part of the initial purchase, but after that first call or so, it's going to cost.

That's gone a long way to keeping the market for inexpensive, off-the-shelf accounting solutions viable, but even with that, many familiar names and products have disappeared over the years.

While that's been happening, Microsoft has bounced in and out of the accounting market. In the mid-market, the purchase several years ago of Great Plains Software gave it the foothold that it wanted in the accounting software business. It's been somewhat less successful in the off-the-shelf market, with the introduction and relatively quick withdrawal of Profit. More recently, Microsoft has tried again with the introduction of its Office Accounting products, which seem to be garnering attention.

To a large extent, the products in this market are more similar than they are different. In order to appeal to a large, diverse set of businesses, vendors have had to implement a large number of features. Chances are, if one vendor adds a knockout feature to its product, you can expect other vendors to follow.

Where vendors diverge is in the approach that they take to appeal to a certain user base. Some vendors include payroll as part of their package, others don't. Inventory is another place where the offerings differ. Almost all vendors, however, now offer ancillary products and services to bolster their products' capabilities.

THIS IS ONLY A TEST

There aren't a lot of vendors in this market space any more. We tested a quartet of products, all from different vendors. Of these, three are available from retail sources. Walk in, pay, and walk out with the software.

MYOB's application is not sold at retail. Instead, your clients can buy it direct from the vendor as a physical boxed product or download, or from a network of value-added resellers and consultants who can install and configure the software and provide training.

Obviously, if you foresee many of your clients using MYOB, you'll want to consider becoming one of these resellers, in order to capture this ancillary business for your practice. MYOB Premier Accounting Small Business Suite has similar features and pricing as the other products reviewed here, and is available as a more-or-less retail purchase, so we decided to include it in this roundup.

With each product, we installed the software and, using the demo client, entered transactions, made adjustments, printed a number of the available reports, performed some customization, and looked at any new features provided in the current release.

None of these packages needs a powerhouse PC as a base. We ran all of them on a typical office desktop. As we like to remind you, accounting is a mission-critical application, so make sure that your client either has their PC plugged into an uninterruptible power supply, or is running the application on a laptop (which still runs on internal battery power when the AC power cuts out).

Even with a UPS or laptop, good back-up protocol is also a must. It's impossible to predict what kind of problems could wipe out data, or even a client's physical facility.

QUICKBOOKS PREMIER EDITION 2007

For the most part, the market for off-the-shelf accounting software pretty much belongs to two vendors - Sage's Peachtree division, and Intuit's QuickBooks and Quicken. The other vendors in this market, such as MYOB and Microsoft, run a distant third in market share.

While many of the features of their applications are similar, Intuit and Peachtree take somewhat different approaches to the accounting/bookkeeping process. Peachtree Accounting started out as true double-entry accounting software back in the days of the CP/M operating system. As the years and decades passed, the software became more civilized, but at their heart, most of Peachtree's packages are oriented towards making accounting as painless as possible.

Intuit has taken a somewhat different tack. Its first product, Quicken, was aimed at making personal financial management as easy as possible. It was pretty much unique in the market, and quickly became enormously popular. When Intuit noticed that many small business owners were using Quicken to manage their business, as well as personal, financial matters, QuickBooks was born.

If Peachtree is targeted to making accounting as painless as possible, QuickBooks is targeted to making small (and not so small) business financial management as painless as possible. These are similar, but far from identical, goals. And in keeping with these different approaches, QuickBooks has some features that Peachtree lacks, and vice-versa. For example, Peachtree Accounting offers payroll as one of its applications, while QuickBooks requires that users buy one of its various payroll add-on services. Peachtree also continues to offer much more flexibility in costing inventory, a feature most QuickBooks users don't really care about.

One place where this divergence in approaches really shows up is in the navigation menus. While many accounting applications conduct a detailed set-up interview, QuickBooks uses the answers to customize the overall navigation flowchart. If your client doesn't do employee timekeeping or prepare statements, these functions won't appear on the navigation flowchart. QuickBooks also makes it easy to install an icon on the top menu bar for tasks that are performed often. Your client can also eliminate icons on this top bar if they aren't frequent tasks.

As with Peachtree Accounting, QuickBooks comes in multiple editions for different accounting needs. These vary from Simple Start, a very entry-level application, to QuickBooks Premier (and Accountant's) Editions - the software we reviewed. The Accountant's Edition is almost identical to Premier, but allows you to make adjusting and period-closing entries, and slipstream them into your clients' books without requiring that they stop using the application in the meantime. Intuit also offers industry-specific editions of Premier for contractors, manufacturers and wholesalers, retailers, and nonprofits.

At the top of the product offerings is Enterprise Solutions 7.0. This is pretty much the Premier Edition enhanced to handle up to 20 simultaneous users, as well as offering a larger database. Peachtree's Quantum edition takes a similar approach, but QuickBooks was there first. Both vendors have the same philosophy - if a business is happy with the software and doesn't want to hassle with the time and money of an upgrade to a mid-market product, simply enhance or change the underlying database to support more users and more transactions, without affecting performance.

The current version is not a major upgrade from last year's version. Intuit has simplified the set-up a bit, and produces a more targeted chart of accounts than with previous versions. Since many clients are confused by overly complex charts of accounts, this is actually a nice benefit, as you (or they) won't have to spend as much time editing the chart produced. Forms design has also been streamlined, and sales tax management has been improved. The Premier edition adds the ability to produce a basic three-year business plan with projected financial statements, which can be printed as a PDF or exported into Excel.

Also new this year are tight integration with Google Maps and AdWords, and an improved Shipping Manager, a feature introduced several versions ago.

These underline the importance of an area where most off-the-shelf accounting applications are expanding - providing optional services and products to expand the capabilities of their core products. QuickBooks Credit Card Processing, Merchant Service for Web Stores, and Billing Solutions are returning products. New this year is the QuickBooks Time Tracker, which allows employees to submit time sheets over the Web.

QuickBooks still has the same limitations that it has had for years. Payroll is still only available as an additional module, and inventory-costing methods are still limited to weighted average and specific cost.

Still, current QuickBooks users do not seem particularly troubled by these limitations, and we doubt that they will have any impact on the continuing popularity of the software. And QuickBooks is ahead of its competition in integrating with the popular Intuit tax prep applications, which makes it even more popular with accountants.

MICROSOFT OFFICE ACCOUNTING PROFESSIONAL 2007

While some software vendors have backed away from the accounting software market, and more have been acquired or merged with the few remaining successful vendors, there's still plenty of money to be made with the right products. Microsoft is very aware of this, and has capitalized on it by purchasing several popular mid-market companies.

This software behemoth has had less luck in the less-expensive financial software marketplace. Its Excel-based Financial Manager application and the entry-level Profit Accounting software that it designed in conjunction with Great Plains Software (which is now part of Microsoft) failed to excite the market at which they were targeted.

Usually, Microsoft doesn't continue to try in a market in which it has failed products, but Office Accounting Professional 2007, which is the new moniker for the Office Small Business Accounting application that was introduced two years ago, just might prove that the third time's the charm.

Office Accounting is available in two editions. The Express Version is free, and is functionally similar to Intuit's QuickBooks Simple Start and Peachtree's First Accounting. It is not really suitable for any but your smallest clients. The second version, Microsoft Office Accounting Professional 2007, is priced at a very reasonable $150, and, feature-wise, falls somewhere in the neighborhood of QuickBooks Pro and Peachtree Complete Accounting.

Microsoft designed Office Accounting Professional to be familiar to Office users from the get-go. The user interface is very reminiscent of Outlook, with multiple viewing panes and a vertical task pane on the leftmost side of the screen. A navigation flowchart in the center of the screen helps users select individual tasks to perform. The home screen presents a set of summary windows with reminders of things "To-Do" and current balances of important areas such as accounts receivable and payable, and bank balances. The Outlook-like interface is a familiar one, and a number of other accounting software vendors have also adopted this approach.

The "signature feature" of Office Accounting is, of course, a very high level of integration with Microsoft Office. This lets you use Outlook for mailing and customer contacts, Excel for specialized analyses, and Word for modifying reports. In fact, Microsoft Office 2003 (or later) is required to install and run Office Accounting Professional.

There's been a recent move towards using SQL as the underlying database, even in lower-end applications. Office Accounting Professional uses Microsoft's SQL Express 2005, and this database engine is automatically installed and configured as part of the installation process. The install routine also allows data from other accounting systems to be imported, though we don't see a huge exodus of QuickBooks or Peachtree Accounting users suddenly switching to Office Accounting Professional.

Microsoft definitely did have accountants in mind when they designed Office Accounting Professional. There's an "Accountant View" that lets you manage multiple clients using Office Accounting Professional, as well as an "Accountant Transfer Wizard" that allows a user to continue to use the software while you make up adjusting and closing entries, which are then incorporated into the client's books. As mentioned before, Office Accounting Professional has a feature set similar to QuickBooks Pro and Peachtree Complete, and, much like those packages, it provides a high level of customizability in formatting reports, statements and invoices. You or your client can also use Word to edit reports after they have been produced.

Office Accounting Professional does not offer payroll, though your clients can integrate with ADP for this function. Microsoft has also arranged to provide access to credit card processing. And while payroll is absent from the application, a usable fixed asset tracking capability is built in, as is multi-currency functionality. As with QuickBooks, Office Accounting Professional provides only a single method of costing inventory. Surprisingly, this method is FIFO, rather than the more common weighted average cost.

Compared to Intuit and Peachtree, Microsoft offers only a limited number of versions of Office Accounting (free or Professional). At the same time, Microsoft points out that there is an upgrade path available to Microsoft Dynamics if needed.

MYOB PREMIER ACCOUNTING SMALL BUSINESS SUITE

While the other three vendors covered in this roundup all sell their packages in the retail channel, MYOB does not. If you want to buy the software, you (or your client) will need to purchase it either directly through MYOB, or from one of the resellers who also offer ancillary services such as installation, configuration and training. There are a fair number of these consultant/resellers, though MYOB is more popular in other countries than it is in the United States.

As with Intuit and Peachtree, MYOB offers several different editions of its accounting products, as well as editions for the Macintosh. Of the four vendors in this roundup, Intuit is the only other vendor with a Mac accounting product.

As indicated by its name, the Small Business Suite is a collection of applications, with MYOB's Premier Accounting at the heart. A less expensive edition, BusinessEssentials, is available for $99, and has a pared-down version of Premier Accounting, as well as leaving out the extra applications that make up the suite. Both editions feature excellent integration with Microsoft Office applications, though Office is not necessary to install or run MYOB accounting.

These additional applications include the Ultimate Financial Forecaster, a business modeling application that is also available for purchase separately; a basic HR application called Staff Files that lets clients keep track of employee vacation and sick days, raises, and evaluations and reviews; the Customer Appointment Manager appointment scheduling software; and a logo creation package.

Feature-wise, MYOB is robust, offering payroll and time and billing, in addition to the standard accounting functions such as AR, AP and inventory. The payroll is fairly basic, but complete enough for many small businesses, and a tax table update service is available to keep withholding current. Premier Accounting can interface with a number of outside payroll service bureaus, including MYOB's own. Inventory costing is limited to weighted average and specific item, which is a fairly typical limitation of inventory at this price level.

One Premier Accounting feature that we liked a lot is the ability to attach and display images in many of the records. Inventory records can have a photo of the part or item, making it easier for employees to find the right one. Pop an image into the customer contact cards, and employees will know precisely whom they are talking with.

Another nice feature is MYOB's multi-user licensing model. As with all of the packages in this roundup, Premier Accounting is single-user. Each additional user requires a single-user upgrade license, so your client can purchase exactly the number of user licenses that they require.

As with the other vendors included here, MYOB also offers a host of optional products to extend the capabilities of Premier Accounting. There is the payroll service bureau already mentioned, a direct deposit module for the included payroll, a payroll forms service, vendor payments service, and credit card processing.

With the other vendors' packages reviewed here, if you want to make entries into a client's books, you will have to purchase a copy of the accountant's edition of the particular software. MYOB will provide a free Accountant's Copy of its software to any accountant who has a client that is using the software. Your client can also download a trial copy, if they want to explore the software's functions and capabilities before making a purchase.

PEACHTREE BY SAGE PREMIUM ACCOUNTING 2008

If longevity is any indication of quality, then Peachtree has it pegged. This division of software giant Sage has been around under one corporate umbrella or another since its inception as the storefront computer store Retail Sciences roughly 30 years ago.

While both Peachtree and its competitor, Intuit, claim large market shares and together pretty much own the market for off-the-shelf accounting, each company has a different approach towards its user base. Intuit has always looked towards making bookkeeping as easy as possible for its users, while Peachtree has always taken the approach of "real" double-entry accounting, albeit with all the goodies, such as navigation panels and wizards, to make this process as simple as possible.

Still, while Peachtree does have its low-end Peachtree First Accounting, the company does expect a certain level of bookkeeping understanding (and appreciation) from its users, and rewards them with features such as the ability to cost inventory using FIFO, LIFO, specific cost or weighted average. As a result, Peachtree Accounting is used in many larger businesses that require full-featured accounting but don't wish to get involved with the complexities of accounting software only available through VARs and resellers. That doesn't mean that Peachtree Accounting is usable only with smaller businesses. Features such as an audit trail report and an internal accounting review report (which details suspicious transactions and possible errors) make the software quite suitable for a larger business.

As with automobiles, accounting software usually receives minor upgrades from year to year, with major upgrades coming much less frequently. Last year, Peachtree 2007 received a few of these more major updates, including a new navigation panel and a business-intelligence-like executive dashboard that the vendor calls its Business Status Center.

We tested a late beta version of Peachtree Quantum 2008. This edition is functionally equivalent to Peachtree Premium Accounting, but with a 10-user cap, rather than the five-user limitation of Premium Accounting. Intuit also takes this expanded-user approach with its QuickBooks Enterprise Edition. Other versions of Peachtree Accounting include Complete Accounting, Pro Accounting and First Accounting. Each of these has a somewhat different feature set, and is targeted to a different level of user requirements.

Peachtree also has industry-specific versions of its accounting software, including editions for construction, nonprofits, manufacturing, and distribution, and an Accountant's Edition that gives the accountant the ability to do consolidations and other complex operations on their clients' books. Peachtree doesn't produce a Quantum version of each of these verticals, but rather incorporates all of the features from all of the verticals into Quantum. When you install (or upgrade to) Quantum, you select if you want to install a vertical version of the software. Quantum has one other, non-obvious difference from other Peachtree editions: The underlying database is Pervasive SQL, which really speeds up transaction times, especially when multiple users are engaged with the software.

Peachtree Premium Accounting 2008's appearance hasn't changed noticeably from last year, when the new navigation system was introduced. This replaced the comprehensive system flowchart with a set of vertical task tabs on the left side of the screen that call up group-specific flowcharts in the center of the screen, while the rightmost pane is used to display any frequently used information for the chosen task list, such as a customer or vendor list or frequently used reports.

While Peachtree doesn't offer any take-your-breath-away new features this year, it does introduce some, such as the ability to attach other documents or images to records. These can be PDFs, Word or Excel files, or even scanned images.

There have also been improvements to existing reports and the form design process. One nice feature is the ability to extend the decimal places up to five digits for unit pricing. This is really an important requirement when individual pieces of inventory have very small prices (such as washers that cost $0.0175 each). Also new with this release is the ability to "broadcast invoices" - sending the same invoice to multiple customers. This is a time-saving feature for those who bill multiple clients the same amount for the same service. For example, you could use this feature to bill all of your clients that pay the same monthly fee for, say, write-up services.

As with the other accounting packages that we reviewed, Peachtree offers a host of additional partnerships and products to expand functionality. While Peachtree Premium Accounting does include a quite serviceable payroll system, with a tax table subscription service available to keep withholding values up to date, your clients can also choose Peachtree's Full Service Payroll, which is an external payroll service bureau. Peachtree also offers Payment and Bill Pay Solutions, a link to integrate with Act! by Sage, the Peachtree Online Backup Service, and WebsiteCreator Pro (to allow your client to build their own Web site) and Website Trader (so they can add an online store to their new Web site).

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

Vendor Information

QuickBooks Premier Edition 2007

Intuit Inc.

(800) 4-INTUIT

www.quickbooks.com

Pricing: Single user - $399; five users - $1,499.

Microsoft Office Accounting Professional 2007

Microsoft Corp.

www.microsoft.com

Pricing: $149 (without Office Professional).

MYOB Premier Accounting Small Business Suite

MYOB US Inc.

(800) 322-6962

www.myob.com/us

Pricing: Single user - $299.

Peachtree by Sage Premium Accounting 2008

Sage Software SB Inc.

(877) 495-9904

www.peachtree.com

Pricing: Single user - $499; five users - $1,099.

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