Getting Started with Accounting Software

After you choose the accounting software you want to use in your business, the hard work is done because actually setting up the accounting software will probably take you less time than researching your options and picking your software.

QuickBooks, Simply Accounting Pro, and Peachtree Accounting all have good start-up tutorials to help you set up the books. QuickBooks even has an interactive interview that asks questions about all aspects of how you want to run your business and then sets up what you’ll need based on your answers.

Installing your accounting software

Accounting software packages produce a number of sample Charts of Accounts that automatically appear after you choose the type of business you plan to run and upon which industry that business falls. Start with one of the charts offered by the software, as you see in the following image, and then tweak it to your business’s needs.

As part of the initial interview in QuickBooks, the system generates a Chart of Accounts based on y
As part of the initial interview in QuickBooks, the system generates a Chart of Accounts based on your type of business.

Once your Chart of Accounts appears, all three programs ask you to enter a company name, address, and tax identification numbers to get started. If you’re operating as a sole proprietor or your business is based on a partnership and you don’t have a federal tax ID for the business, you can use your Social Security number.

You then select an accounting period. If the calendar year is your accounting period, you don’t have to change anything. But if you operate your business based on another period of 12 months, such as September 1 to August 31, you must enter that information.

If you don’t change your accounting period to match how you plan to develop your financial statements, then you have to delete the business from the system and start over.

Customizing accounting software to match your operations

After you set up your business using the accounting software, you can customize the software so that it matches your business’s needs. For example, you’re able to pick the type of invoices and other business forms you want to use.

This is also the time to input information about your bank accounts and other key financial data (see the following figure). Your main business bank account is the one that should be used for the first account listed in your software program, Cash in Checking.

QuickBooks collects information about your bank accounts as part of the initial interview for setti
QuickBooks collects information about your bank accounts as part of the initial interview for setting up a business.

After entering your bank and other financial information, you enter data unique to your business. If you want to use the program’s budgeting features, you enter your budget information before entering other data. Then you add your vendor and customer accounts so that when you start entering transactions, the information is already in the system.

If you have payments to be made or money to be collected from customers, be sure to input that information so your system is ready when it comes time to pay the bills or input a customer payment. Also, you don’t want to forget to pay a bill or collect from a customer!

You may be able to import data about your customers, vendors, and employees from software packages you’re currently using to track that information, such as Microsoft Excel or Access. Full instructions for importing data comes with the software program you choose.

Don’t panic about entering everything into your computerized system right away. All programs make it very easy to add customers, vendors, and employees at any time.

Other information collected includes the type of accounting method you’ll be using — either cash-basis or accrual accounting. You also need to enter information about whether or not you collect sales taxes from your customers and, if you do, the sales tax rates. Also, you can pick a format for your invoices, set up payroll data, and make arrangements for how you want to pay bills.

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