Cashflow Manager and MYOB Software are two of the most popular Accounting Software Packages used in Australia. Cashflow Manager is a cash based software program, whereas MYOB can be used of Cash or Accrual Accounting.
Many business owners fall into the trap of using a spreadsheet to record their financial information. I do not recommend using a spreadsheet for the following reasons:
· There is no bank reconciliation process
· Expenses or Income can be easily missed
· Balance Sheet items are not normally recorded
There are different versions of Accounting Software and the prices vary accordingly, I have listed some of the different types of programs below:
· Cashbook - records income & expenses as they are received or paid
· Accrual - records income & expenses as they are invoiced, payments and receipts need to matched to a corresponding invoice.
· Single User - only one user can access the software at one time.
· Multi User - more than one user can access the software at the same time.
· Includes Payroll - necessary if you employ staff.
· Includes Stock Inventory - necessary if you want to keep track of stock that you buy & sell.
Once you think about your business processes you can easily decide on the software you need for your business. For example, if all your customers pay you in Cash at the time of purchase and you pay your suppliers Cash on Delivery you could use a CashBook system. However, if you need to issue invoices to your Customers and then allocate receipts to those invoices you would need an Accrual System. Or, if you run 30 day accounts with your suppliers you would need an Accrual System.
A Payroll module would not normally be necessary for a Micro or Solo Business Owner, as you are not employing staff. Payments that you pay to yourself, as the business owner, are not necessarily classed as Wages, they may be considered Drawings or Distributions depending on your business structure. You should discuss your Business Structure with your Accountant and decide on the most suitable set up for your Business. You do not need a Payroll Module in your Accounting Software to just pay yourself.
In regard to Stock and whether to run an Inventory System, you need to consider whether you will hold Stock on Hand or order the Stock items as required, and how many Stock transactions you are likely to have. A lot of Micro Businesses sell mainly their services and a small amount of Stock. For example my Bookkeeping Business sells mainly Bookkeeping Services and some Stock (Software). I do not need to run an Inventory System to manage my Stock Sales. I order the stock as required and do not hold Stock on Hand. Managing an Inventory System can be quite a large task and causes novice Bookkeepers quite a lot of headaches. I would advise against it, unless absolutely necessary. You can still track your Income and Expenses for the Stock you sell without setting up a full inventory System. I would strongly advise you get advice from your Bookkeeper in regard to managing your Stock.
Owner Operators in a small business would normally need a Single User Software application which is why I have listed the 3 versions below. You should choose the most cost effective software package, that suits your needs at present, you can always upgrade later.
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