Archive for February, 2007

In the fast-moving Web 2.0 accounting software world, Intuit’s offering, QuickBooks Online Edition, is finally ready for Prime Time. Here are 10 reasons to try “QBOE”:

1. Collaboration. The hallmark of Web 2.0. Sure, you don’t want 100,000 “friends” looking at your books, but giving your financial team anytime, anywhere access to the books can accelerate the design and execution of your accounting system. Read: you get better data faster to make management decisions. This holds true whether your team is located in the same city, around the U.S., or all over the world.
2. Scalable. Start small or jump in with big numbers. QBOE can handle companies from start-up to $10 million in sales, maybe more.
3. Feature rich. You can track time, profit centers, and job costing; customize reporting; make estimates and recurring invoices; download online banking transactions…the list goes on and gets better every month.
4. Continuous improvement. Intuit’s not standing still. If the future of small business accounting is on-demand, software-as-a-service (SaaS), they’re investing heavily in a product that will help them maintain market share and protect the value of their QuickBooks brand.
5. Quick starting. Getting started is easy and fast. We’ve got a great rep who helps our clients. You can be up and running at a basic level in a matter of hours.
6. Full general ledger. A bona fide general ledger system opens the door to more effective financial management – even for small, simple start-ups. QBOE is an easy way to access a “real” accounting system vs. the pen and paper, spreadsheet workarounds that we often start with.
7. Affordable. For a 4-user package, pricing starts at $11 per month with an annual subscription and a permanent 40% discount if we recommend you to our rep. At the time of this writing their most expense package is $39.95 per month, but you probably don’t need all those features (e.g. we don’t recommend their payroll service). The biggest cost savings, though, are in reduced IT costs: upgrading your server/workstation networks to accommodate remote access, multi-user QB 2007 desktop versions can cost thousands of dollars.
8. Security. I wrote about this last week. Suffice it to say that Intuit’s data security protocols are probably better than those of most small businesses. Use a secure user name and password unique to your QBOE account. For additional peace of mind, download a copy of your QB Online file every week or so.
9. Customer service. So far their service has been out of this world. I’ve e-mailed them “how to” questions and received e-mail responses within hours, usually followed by phone calls. Answers were quick and definitive.
10. Desktop import/export. You can’t flip back and forth between working in QB Desktop and QB Online, but you can upload your existing QB desktop into QB Online. You only get one chance to do this, however – when you establish your QBOE account.

So what’s the bad news? Don’t look further if QuickBooks desktop is working great for you right now and meeting all your needs. If you need detailed inventory tracking, purchase orders, or online bill pay directly through QuickBooks – these features aren’t yet offered. If you’re on a Mac operating system that’s not PC-enabled, you can’t use QBOE. And finally, while the look and feel of QBOE has improved, as well as it’s reporting, it’s not as fast, clean and sharp as QB desktop.

Your business’ specifics will determine whether QBOE is right for you. You can talk with their reps, and our expert QuickBooks consultants can help you, too. But in general, QBOE has definitely come of age and we now recommend it without reservation for many types of businesses. And for the record, as spelled out in section 24 of our service policies, to avoid conflict of interest we do not accept any commissions for referrals to any third party vendors, including Intuit products and services.

To test drive QuickBooks Online Edition yourself, click the “Launch the Demo” icon on their sample company page.

I had finally warmed up to the idea of sensitive financial data being housed “out there” on the internet when I heard that an online accounting service lost some of its customers’ data. Apparently Freshbooks, a software as a service (SaaS) invoicing application, lost about 12 hours’ worth of transactions for a small segment of their customer base. Poof! Gone.

Very much to their credit, they did the right thing: they told their customers what was going on, fixed the problem, compensated all customers, and they apologized. They explained the specifics of their data loss - a real-time redundant mirrored drive system didn’t work like it was supposed to - and strangely enough, that actually gave me more confidence in internet-based data processing storage.

Why? Because no matter how you slice it, data security boils down to getting a bunch of one’s and zero’s safely tucked away into little boxes of plastic and metal located somewhere around the world. And I figure that reputable vendors are likely to be better at that than your typical small business. So when migrating your data online — whether it’s a Web 2.0 on-demand SaaS accounting app like Freshbooks, QuickBooks Online, NetSuite, or Blinksale, or a remote backup system like BackupSolutions - sign up with an established company that has proven itself. Years of solid service count. Millions of successful transactions count.

And even then, don’t assume anything. Keep asking questions until you understand how the backup systems work. Learn how to test-restore a backed up file. Monitor, check, double-check, and triple-check. Ultimately the responsibility lies with us to make sure our mission critical data are secure.

And if I had any doubts about the utility of online data storage, yesterday I received an e-mail from a business associate:

Our office was burglarized the night after Christmas and my computer was stolen. I cannot tell you how fortunate I am that ALL my confidential data was on remote secure servers and not on my hard drive. They even took my on-site backup.

Poof! Gone.

If you’re tired of hounding your 1099 contractors for their tax ID numbers, here’s a simple way to solve the problem: require them to fill out an IRS form W-9 before you pay them. They are required by law to fill one out on request, and they’ll be highly motivated to do so. Faxed copies should be sufficient in case you’re ever audited.

As you close out last year’s books and ship them off to your CPA, don’t go on auto pilot. Instead, stay engaged in the annual tax process. You’ll lower your tax bill, save on CPA / bookkeeper fees, and help avoid a tax season cash flow shortfall. Here are some insider tips how to do that…

Start with a few practical matters. Ensure your bookkeeper has advanced the closing date on your QuickBooks file to prevent “after the fact” changes that will drive your CPA crazy and drive up the cost of your return. Also, ask your CPA for some convenience items: a PDF version of your returns for easy reproduction throughout the year, a full trial balance, and what’s called, “Next Year Depreciation Schedule.” These little things will save your bookkeeper time.

Now set a schedule (IRS tax calendar) with your CPA to complete both business and personal returns. Promptly respond to requests for information and leave time before the filing due dates to review the returns. You should be familiar with the essential logic of your tax returns. If you need CPA-prepared financial statements (compiled, reviewed, or audited) ask for a quote and timeline.

Ask for a “good enough” estimate of your tax liability before the return is completed.  Plan ahead. Fold both 2006 and 2007 tax liabilities into your cash flow forecast: expected tax liability for your business entity and personal returns, minimum W-2 withholding to avoid penalties, and schedule for making estimated tax payments.

Income tax is one of an entrepreneur’s largest expenses, but some CPAs don’t offer tax advice unless asked. Ask how you can lower your tax bill and explore your risk tolerance: do you want conservative, moderate or an aggressive tax strategy? While you’re at it, when’s the last time you asked your CPA to help you get rich? Tap into her experience. You never know: she might come up with a million dollar idea.

We’ll get to the tax deadlines in a moment, but February’s a great month to avoid financial surprises. For instance, take a look at the covenants in your bank loan or line of credit agreements: do you have to submit financial reports to your banker or meet certain financial ratios? Is your company obligated to send numbers to its equity investors? What key contracts expire or come up for renewal this year? Think about office/warehouse space, equipment leases, insurance policies, etc.

Plan ahead to avoid a mini-crisis later in the year, one that diverts your attention from executing your business plan.

Tax-wise on Feburary 28th your 1099/1096’s are due to the IRS, but the bigger deadline is to send your business’ books to your tax preparer before the queue gets too long. Remember that the corporate filing deadline approaches (March 15th) and owners of pass-through tax entities need the business returns to complete their personal returns. Speaking of which, did you get an organizer from your CPA? Time to get to work on that annual paperwork compilation madness.

Closing the books should have a little extra spice if you put your 2007 budget into QuickBooks — you’ll be able to pull a January actual vs. budget report in a matter of seconds. This is where the hours of prep really pay off. What do you see from January that suggests corrective action for the remaining 11 months of the year?