Smart Business Banking - When you’re online, not in line
Every small business owner knows that the only thing harder than making money is keeping it. A bulging cash register means nothing if every cent is earmarked for bills. No one goes into business for the pleasure of shuffling bills, juggling accounting books and writing checks, but business paperwork is a necessary evil. One good gust of wind, however, and your business could literally go out the window. Accounting software and online banking services can vastly reduce paperwork while helping you keep a closer eye on the day-to-day flow of your business. Today’s businesses cannot be run based on the monthly snapshot that a paper bank statement provides.
Many banks now offer low-cost or free online banking services specifically designed for small businesses. With online banking, you can view your account balance in real time, transfer money between accounts, find out if specific checks have cleared and perform other banking functions. In most cases, online services are available around the clock. The only thing you need for most online banking services is a computer with an up-to-date Web browser. Some services will even work with the small Web browsers found in handheld computers and cell phones.
A few words of caution: Don’t do your online banking on a computer connected to the Web via Wi-Fi connections. These popular wireless connections are available in many hotels, airport lounges, coffee bars, libraries and public spaces. However, most of these connections are not secure. Even though your bank may offer a secure Web page, the data traveling wirelessly from your computer to the Wi-Fi base station is usually not encrypted. Anyone with the right software could “sniff” the airwaves and view your banking user ID and password as you enter them.
Online banking access is even more important today because of the federal government’s Check 21 Act, which speeds up the check-clearing process. This can be both good and bad news for small-business owners. While your incoming checks now turn into cash faster, Check 21 also means that the check you write today could bounce tomorrow if you don’t watch your account balance closely.
Many banks now offer online bill paying, which lets you pay bills via a Web site or through accounting software. In most cases, your money is electronically transferred to the recipient, but in cases where the recipient cannot accept electronic transactions, a paper check is generated and mailed.
Online banking and bill payment services are often very inexpensive or free. For example, HSBC Bank USA last year had a $15 per month service charge, as well as per-check fees for its least-expensive business checking account. Today, the bank offers a free business checking account and throws in free Business Internet Banking, as well as free online bill-payment service. No minimum deposit is needed to maintain the free services, but no interest is paid on the checking account. HSBC is not alone in offering free checking and online services. Many large banks recently cut or eliminated online service fees, so take a close look at your bank’s Web site for current information.
Of course, you can’t run a business with one eye on the Web all day. Accounting software takes the place of the old-style paper ledger, and today’s products are fairly easy to master. Intuit Inc.’s QuickBooks (888-729-1996; www.quickbooks.com) and Peachtree Accounting from Best Software (877-495-9904; www.peachtree.com) are two of the most popular business accounting packages available today. There are many others, however, so a search on the Web might help you find the right product for your situation.
Most accounting software products make it easy to get started by offering templates for popular businesses like lawyer’s offices and retail stores. These templates can be edited or you can create your own. A good thing about accounting software is that it gets easier the more you use it. For example, the first time you create an invoice for the widgets you just sold to Acme Co., you have to enter the company’s name and address, record the name of a contact person, insert phone numbers and e-mail addresses, create a line item for widgets and type in the price and quantity sold.
However, the next time you sell an item to Acme, you’ll only need to open a new invoice and select “Acme Co.” from a list. The name, address and contact information will be automatically entered on the invoice. You could also save the entire invoice and use it as a template for future Acme sales, editing the list of items sold as necessary.
As you use accounting software to track bills and create invoices, the software does a great deal of number crunching in the background. So how much does Acme owe you as of today? Just generate a quick report on the company and you’ll be able to view the outstanding invoices and how old they are. Both Peachtree Accounting and QuickBooks offer colorful, single-screen summaries of your accounts, unpaid bills, overdue invoices and other timely information.
The 2005 versions of QuickBooks are tailored for businesses ranging from sole proprietorships to large corporations. They include Simple Start ($99.95); Basic ($199.95; $99.95 to upgrade from older version); Pro ($299.95; upgrade, $199.95); Premier ($499.95; upgrade, $379.95); Enterprise Solutions ($3,500); and Online Edition ($19.95 per month or $180 annually). Also available is QuickBooks Pro 2005 for Mac ($299.95; upgrade, $199.95) for Macintosh computers.
The lineup of Peachtree business accounting software, from low-end to high-end, includes First Accounting 2005 ($99.95); Accounting 2005 ($199.99); Complete Accounting 2005 ($299.99; $699.99 for multiuser); and Premium Accounting 2005 ($499.99; multiuser, $999.99).
The higher versions of QuickBooks and Peachtree Accounting are for larger companies that deal with large inventories, need elaborate financial reports, want to process credit cards or need to use the software to manage payrolls. Peachtree Accounting and QuickBooks compete closely with each other on a feature-by-feature basis. Picking the right one for your business will require your doing some homework.
All of the above versions are fairly easy to learn, thanks to tutorials and wizards built into the software. A nice feature in all but the Simple Start version of QuickBooks is the ability to download bank transactions into the software. Hundreds of banks are supported by QuickBooks, but many are not, so check with the QuickBooks Web site to see if your bank is on the list.
Things may be changing, however. For example, the QuickBooks Web site notes that JPMorgan Chase & Co. is among the banks that allow customers to download transactions into Quick Books. But a visit to the JPMorgan Chase Web site (www.chase.com) in June revealed that due to a Web site software upgrade, the bank had temporarily stopped taking new applications for enabling the ability to download transactions to QuickBooks. The bank planned to resume taking applications in August.
The Web and the right software can streamline any business if you take the time to learn the products and services. Sure, you can do things the old-fashioned way, with a pencil and a ledger. But, come tax time, what would you rather deal with: a shoebox full of receipts and handwritten notes or a neatly formatted financial report?
By Robert Anthony