Without accounting software, simply put, you're missing out. You're wasting time. You're working with blinders on, with half the information, and without a moment to spare.

Time is Money

Work that was once left to accountants can now be done by business professionals themselves, and in no time flat. A report that may have taken your CPA a month to supply now appears on your screen in a matter of seconds, thanks to accounting software for small to mid-sized businesses. Programs such as QuickBooks, Peachtree, Mind Your Own Business, and One-Write Plus are available for approximately $50-200 for single-users. Here are a few things you can do in the blink of an eye:

* It's been a little slow this month. Business just seems down. You need a quick month-to-month report that shows both the money coming in and the money going out. No problem. Ask your software to generate a chart that displays a side-by-side comparison of payables and receivables.

* "Drill down" to get to the bottom of it. Drilling down is a feature in many software packages, allowing you to uncover layers of information until you find the source. So if it seems a number seems high - perhaps your accounts payable this week is unusually hefty - it's easy to discern the cause. (Perhaps two monthly invoices fell within the same month.)

* Invoices should be entered as they are received so that your accounting software can let you know how much and to whom you owe.

* If your business requires the use of sub-contractors or vendors, you are required to file the 1099 form, a record of how much you've paid them over the course of the year. Since all of the relevant information has already been entered into the computer, your accounting software takes care of it for you.

* 940, 941, W2, W3, and 1096 tax forms are also prepared and printed; a report that will assist you in filling out the State Unemployment Form can also be generated.

* Most accounting software programs offer comparative reports which show at least this year's numbers to last year's in the areas of profit and loss, budget to actual, and balance sheets. Depending on the program, these comparisons can be quite elaborate, dealing with multiple months or years.

* So that your financial information can be presented in easy-to-read charts or graphs, most accounting software programs interface with Microsoft Excel.

Of course all of these features only work if the information is actually being entered into the computer. Missing or dated elements can and will affect the accuracy of charts and reports. Accounting software, as wonderful as it is, is only as helpful as you make it. So appreciate the miracles it can work, but realize that it needs you. Without your input, it can't do its job.

A Picture Paints a Thousand Words

Virtually all accounting software, for small to mid-sized business, are designed to be user-friendly, visual, and immediately familiar. What you see on your screen mirrors the good old paper formats, and entry fields are as self-explanatory as possible. It's just a matter of entering the data and letting the computer do its magic.

Writing checks, for example, is a piece of cake, since on-screen representations of the actual forms are used. Simply type in the information, and then send the print job. The end result is flawlessly professional checks. And there's no need to worry about adjusting your balance -- your computer has already done it.

Pull up your aged accounts receivable report (a list of who owes you money), and you'll immediately get the picture: whose bills are outstanding, how much they owe you, and from which invoices. Most accounting software programs even have template collection letters, so with a few more mouse clicks, you've generated a polite reminder letter.

Instead of hand-writing invoices, they can be generated from pre-set forms. The result is a clean, professional document, which is consistent in layout; your customers will learn to recognize your invoices in a glance, since they follow the same format each time. Finding balances, invoice numbers, dates, and other information is also easier with a consistent look.

Security

If you're still clinging to your old-fashioned ways under the pretense that your checkbook is only safe if it can be physically locked away in a drawer, fear not. The computer whizzes who've programmed accounting software have already considered this concern, and have included security features.

You decide who has access to what; passwords are required in order for users to enter restricted areas. If you're on a network, the same holds true. Several users can have access to the program, but it can be decided for each person which screens are accessible.

Before You Buy

A good starting point in your research of accounting software is a conversation with your accountant. Since he or she is familiar with your financial situation, as well as the strengths and weaknesses of competing accounting software packages, your accountant can give you good advice, specific to your individual needs. While many of the popular packages are very similar (if one adds or improves a feature, the others typically follow suit), there are subtle nuances that differentiate them.

Also, if your accountant is familiar with the software you choose, the transition from your records to your accountant's will be smoother, which expedites the preparation of your tax returns or financial statements. However, an accountant should be able to take any well-organized, printed report, generated by whichever software you choose, to prepare your tax or financial forms.

Among the most popular packages are QuickBooks, Peachtree and Mind Your Own Business, and One-Write Plus. Stay tuned for a follow-up article for in-depth reviews of these four programs.

Karen Mosteller is a CPA with Markham Norton Stroemer & Company; she specializes in accounting software and management consulting. Cristin Bishara is the firm's Marketing Director.