Running an accounting practice as a sole practitioner presents some unique challenges. In many cases, you need to provide the same services to your clients, at the same level of quality, as a larger firm would, and often do this with far less resources at your disposal. It's a daunting task, but not impossible.
Larger practices often have a substantial budget for technology. This means that they can operate with the most powerful hardware and latest software. If a firm's budget for technology is $1,000 per year per staff member, a practice with a staff of 100 is going to spend as much on technology as some sole practitioners take home as income.
That doesn't mean that a sole practitioner has to operate with technology that's a decade behind the times. It just means that your budget for technology needs to be employed effectively.
BUY FOR THE LONG TERM
Large practices have an IT plan. They map out their needs for both the short and long term, and try to cover the short-term needs with equipment, software, and a reserve for maintenance that will carry the practice's needs into the long term. Of course, the future is unknowable, and the best laid plans ... well, you know.
But having a plan is even more necessary for the sole practitioner or smaller firm. Being small provides the advantage of being able to move quickly when necessary to adapt to changing conditions. But it also imposes the constraints of working with a more limited budget and operating funds.
Developing an IT plan for your specific needs and circumstances isn't difficult. First look at what you have right now. Is your PC or laptop more than a few years old? If so, you'll probably want to upgrade or replace it before too long. Do you own a tablet? If not, or if it's a first-generation iPad or Android model, you'll probably want to plan on replacing it soon - many of today's accounting applications support remote and mobile access, and there are also numerous inexpensive apps for tablets and smartphones, many of which require an up-to-date version of the tablet operating system.
If you have an original iPad, and you want an app that requires iOS 6, you're out of luck. The first-gen iPad can't be upgraded past iOS 5, and many of the original Android tablets are stuck in Android 2.x (the latest version is KitKat 4.4, and a new version is set for release this fall).
Once you've taken an inventory of what you own, look at the work you perform. What are you doing for clients? Write-up? Tax prep? Financial planning? Payroll? Do you have a client portal or applications running that allow clients to remotely access their data? Are you planning on adding these services if they aren't already offered?
Even if you are running (or plan to run) all of these, you don't necessarily need a server. In most cases, a standard good-quality PC will do just fine. A server isn't all that different from a regular PC - it just has some features that add reliability. Many servers offer redundant power supplies so if one fails, the other automatically takes over. Servers are also likely to use hard disk drives rated for 24/7 use. These drives usually have a higher-rated "mean time before failure," or MTBF, and are almost always supplied in some version of RAID.
If you are upgrading to a new machine, resist the temptation to look for a bargain. You might not need a $3,000 server, but a $400 desktop PC is often going to have lesser-quality components than one that costs $1,000. Plan on (and budget for) a three- to four-year lifetime for a production system running mission-critical applications. After that, you're tempting fate. Sure, you may backup regularly, but recovering from a complete system failure is going to cost you time, money and aggravation.
Much of the same advice applies to laptops, especially if you are using a laptop as your primary computer. Laptops have inherent power protection. If the power goes out while you're using it, the laptop automatically switches to its battery. With laptops, the problem is heat. Most laptops are only moderately good at getting rid of all the heat the components generate, so over time, heat takes its toll.
While you don't need a server, you do need power conditioning. That doesn't mean a surge protector -- it means having an uninterruptable power supply, or UPS, that provides high-quality power output for a long enough period of time to achieve a controlled shutdown.
Don't skimp on this: A good quality UPS has features like automatic voltage regulation that keeps the power to the attached devices close to the 110 volts it should be at the wall outlet (you'd be surprised at how greatly power varies between 90 and 135 volts or more at the outlet), and also provide a USB attachment to the PC and software to automatically shut down the PC if the power outage lasts for more than a designated time.
But before you do anything, the question that has to be answered is, do you upgrade an existing PC or replace it? That same question needs to be asked when discussing the peripherals - monitors, keyboards and printers.
When it comes to a printer, the answer is easy -- replace it. Unless you're using an enterprise-class office multi-function printer, it almost never makes sense to repair a printer or MFP. Today's printers and multifunctions have lower prices and much more economical ink cartridges than those that are only two or three years old. If the printer in your office is more than three or four years old, it may work just fine, but it's probably costing you a lot more to operate than a brand-new unit would.
Monitors and keyboards are not quite as easy a decision. A good keyboard can last for a considerable time, and you'll lose productivity with a new one until you get familiar with its touch and feel. Displays are also a question mark. Flat panels often gradually lose brightness over time, and a large 27-inch-wide screen makes it easy to enlarge what you're working on or put two pages side-by-side.
If you've paid a lot for a desktop (or laptop), it's tempting to upgrade rather than replace it, even if it's four or five years old. Upgrading RAM and hard drives is fairly easy to do, and hard drives are one of the components in a PC or laptop that are most vulnerable to failure. If you're running out of room, a larger hard drive is almost a no-brainer, but putting a new drive in an older machine doesn't do anything about all those other components that have been sitting in a heat-soaked environment since the moment the machine was first turned on. If you do decide that you need more hard disk space, a desktop USB drive or a network attached storage drive are the two easiest ways to provide this additional drive space.
HIT THE SUITE SPOT
Hardware is just part of the equation, and often it's the least important part. Your hardware only exists to provide access to the software applications that you are using. One area where sole practitioners are particularly vulnerable is in their selection of software. Large practices with dedicated IT staff can afford to pick and choose and assemble their overall software workflow from applications offered by different vendors. This is called the "best of breed" approach, and it lets the firm choose applications from vendors who sell a specific application that is better suited to the firm's needs than an application from another vendor.
The IT staff and vendors often have to put in a considerable effort to stitch these applications together to achieve a smooth workflow. Many sole practitioners can't afford the time, money or effort required by this approach.
An integrated suite of applications, like Accounting CS from Thomson Reuters or ProSystem fx Office from CCH, might be a reasonable solution. These, and other similar accountant-oriented suites, offer an integrated workflow from the get-go. For other practitioners who already are invested in a particular tax prep and client accounting package, adding workflow and practice management tools from vendors like XCM or Office Tools Professional to the mix might up efficiency without requiring a large outlay of time and money.
One area that simply can't be ignored or dismissed is the cloud. Many of the articles written about the cloud stress the accessibility of applications and data. That's important whether a practice is large or small. Of greater importance for the sole practitioner, however, are the economies provided by not needing an extensive in-house hardware and software foundation.
AccountantsWorld, NetSuite and Intacct were all early entrants in offering hosted services, but pretty much every major accounting and tax software vendor offers some version of hosted service, and there are also vendors that will host your applications in the cloud for you, such as RightNetworks and Cloud9.
And when it comes to software, one last piece of technology that no sole or small practitioner should be without is electronic billing and payments. Square plugs into your smartphone and lets you swipe credit and debit cards, and Bill.com is a great way to both bill your clients and receive payment from them directly into your bank account.
WHO ARE YOU GOING TO CALL?
A real problem facing many sole practitioners is locating resources. You want your clients asking you for technical advice, not the other way around. It's fine if a client wants to tell you about the latest app they found for their smartphone or tablet, but your equipment and know-how should be up-to-date enough so that when they ask about accessing their QuickBooks from an iPad, they don't catch you flat-footed.
Keeping your level of technical know-how current isn't always easy. State societies and chapters are one obvious place to turn to, with CPE courses that not only help you meet requirements but also help you learn new skills and technologies. Additionally, many of these courses are given as online webinars.
Software vendors are another great resource. Product user groups are frequently accessible online to non-members, and you'll find plenty of users who are happy to share their expertise. Online social media groups, such as CPA Tech Connect, are another resource, as are local colleges and even libraries. Accounting publications and Web sites are yet another good resource.
It's not uncommon for many of us to be reluctant to take advantage of local resources. What if a client sees us there? What will they think? Just remember, it doesn't reflect poorly on you to not know something - none of us can know everything. What does reflect poorly on you is if you aren't willing to learn.
NOT A PANACEA
One last thing to consider is that while technology can make you more productive, it's not a panacea for all that ails you. Computers can run 24/7 for long periods of time. You can't. And while the term "sole practitioner" conjures up an image of you juggling everything in your practice by yourself, that doesn't necessarily have to be true.
The nice thing about technology is that when it becomes outdated for one use, it doesn't necessarily become so for other uses. Instead of retiring that old Pentium system when you buy a new Core i5, consider repurposing it and moving some of your practice's less computer-intensive operations onto it, such as time and billing or online research and general Web browsing.
This allows you to bring in part-time (or full-time) help to perform tasks necessary to your practice, but which don't require your specialized knowledge and experience, and won't require you to give up your time on the office's production system.
At the very least, if you're replacing a monitor or keyboard that's still working, put the old one in a closet. If you suffer a failure of a current keyboard or display, you'll have the means to stay working until you can arrange a replacement.
And when it does become time to put your old technology out to pasture, if you're not repurposing it, keep in mind that it may still hold data like e-mail accounts and passwords, which you won't want to fall into other people's hands. If it's a handheld device, such as an old smartphone or PDA, look online for a way to completely erase or reset the device. With many phones, simply removing the SIM card still leaves much of your data in the device.
With an old PC, you can physically remove the hard drive and have at it with a drill and hammer, destroying the platters that the data is written on. But an easier way (and safer way than using power tools) is to wipe the drive using a program designed for this purpose. LSoft Technologies' Active Kill Disk is a good utility to accomplish this - it physically overwrites every byte on the drive with zeros.
ADD TOMORROW TO YOUR BUDGET
As with many things in life, you can count on Murphy's Law kicking in at the most inopportune time. To get the optimum return on your technology budget, you don't want to have to settle for a less-expensive or less-capable piece of tech simply because of an inopportune failure, or you decide you need to update or upgrade your current technology inventory at a financially dry moment.
Many of us put a reserve for technology into our budget when planning. That doesn't help if the need for this budget line item comes at a time when we can't really afford it. The answer is simple, but requires discipline. Years ago, "Christmas Clubs" were popular at many banks. These were savings accounts in which you agreed to deposit a fixed amount every week. At the end of a year, generally right after Thanksgiving, you closed the account, received cash to buy presents, and opened a new "Club" account for the next year. It's still a good idea. Open a "Technology Club" savings account, and set up automatic deposits every week or month.
You don't have to cash it in once a year, but hopefully, if you can avoid raiding the account for a year or two, you'll have the resources to keep your technology effective, productive and up to date.
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