Several unique terms and phrases describe the features of software we review on this site, some easier to grasp than others. This list briefly defines terms relevant to Accounting Software.

Ratings

Ease of Use

Accounting software that is simple to understand; intuitive, and has simple data entry.

Help/Documentation

Toll-free telephone support, email support, live chat support. The manufacturer should respond to questions quickly and completely.

Accounts Receivable

Sales of products, goods, or services rendered. This includes invoices and shipping for the sales.

Accounts Payable

Paying bills, writing checks, paying vendors, making purchase orders, and creating quotes and memos.

Payroll

Maintenance of employee records, including direct deposit data, wages, pay periods, 401K data and tax forms.

Inventory

Maintenance of stock-on-hand. This includes tracking product numbers, supplier contact information, stocking locations, and different cost methods.

Banking

Day-to-day management of your accounts, including reconciling accounts, bank deposits, voiding checks, etc.

Time Billing

Tracking time for services, including employee time tracking (daily and weekly), vendor expense tickets, and a task timer built into the software.

Job Costing

Estimating and tracking particular jobs.

General Ledger

A list of all the credits and debits for all the accounts within your business. For more information, read Your General Ledger click here.

Fixed Assets

A list of all the possessions and resources that your business owns, including accounts, offices, and other machinery.

Reports Available

Accounts Receivable

All the reports in the accounts receivable section, including analyze sales and item aging.

Accounts Payable

All the reports in the accounts payable section, including purchases, bills, and quotes.

Payroll

This reporting section deals with all payroll activity, including activity details, accrual balance summaries, tax reports, paychecks, etc.

Inventory

This reporting section deals with all payroll activity, including activity details, accrual balance summaries, tax reports, paychecks, etc.

Banking

Balancing the financial statements of a company.

Time Billing

All accounts that deal with time billing, including jobs that require a payment based on hours worked.

Job Costing

Reports that include all job pricing, estimating, or listing job details.

General Ledger

A record of all transactions (usually kept in book or large file), generally divided into five categories: Assets, Liabilities, Equity, Revenue, and Expenses.

Fixed Assets

Long-term possessions intended to be used (and depreciated), such as offices, computers, furniture, and other equipment.

Financial Statements

Includes all financial statements, accounts and reports, for example, Cash Flow, Budgets, Income, and Balance Sheet.

Graphical Summaries

Reports used for daily business management. Use these to graph sales and purchases.

Accounts Receivable Module

Standard Invoices

Simple, unchangeable bill requesting payment from the buyer

Customizable Invoices

Add or delete items to adapt billing invoices to suit your needs.

Email Invoicing

Allow you to email invoices.

Print Invoice Shipping lables

Allows you to print the shipping label for a professional look on the package.

Estimate Shipping Costs

Calculates approximate mailing fees.

Track Shipments

Allows you to see the status of a package in transit.

Specify Shipping Methods

Choose a shipping method from common carriers (FedEx, UPS, or regular mail.)

Accept Credit Cards

Offers credit card processing over the Internet.

Recurring Transactions

Displays frequently used invoices for easy access.

Calculate Finance Charges

The accounting software calculates interest charged for the transactions you made with a credit card. The finance charge the percentage paid to the lender for the right to borrow money.

Accounts Payable Module

Purchase Orders/Quotes

Allows you to make purchase orders and quotes for your customers.

Customize Purchase Orders

Allows you to specify which fields you want on your purchase orders.

Vendor Credit Memos

Allow you to make memos for individual vendors so vendors know exactly how much credit is available.

Standard Checks

Typical bank checks.

Customize Vendor Checks

Allows you to specify which features of checks to keep or delete.

Print Checks

Allows you to print your own checks.

Print 1099 and 1096 Forms

The purpose of the 1096 form is for the transport of paper forms 1099, 1098, 5498, and W-2G. The purpose of the 1099 form is to report any additional income.

Payroll/Employees Module

Set Wages Salary/Hourly

The software can change employees' pay status.

Pay Frequency Weekly/Semi-Weekly/etc.

You can select which pay period is right for your company.

Set Employee Status Active/Inactive

You can specify whether the employee is active or inactive in the company.

Direct Deposit

The employees' checks may be automatically deposited into their bank accounts so that the company doesn't have to mail out payroll checks.

401K Deduction

A 401K is an individual retirement account that allows an employees to set aside tax-deferred funds each pay period. This plan was named after a piece of the IRS tax code.

Automatically Calculates Payroll Taxes

The accounting software automatically calculates the taxes that each employee owes.

Software Maintained Tax Tables

The accounting software maintains current tax tables through the Internet. This includes tax law changes that apply to payroll.

Print W-2 & W-3 Forms

These tax forms report income paid and the taxes withheld for employees.

Print 941 & 940 Forms

The 940 tax form is used to report your annual federal unemployment tax act (FUTA) tax (for unemployment benefits). The 941-tax form is used to report income tax withheld from wages.

Inventory Module

Track Item by Number UPC/SKU/Item

This feature allows you to track all items in your inventory by item number, SKU, or UPC.

Include Item Image

The accounting software allows you to include a picture of the inventory item.

Set Item Active/Inactive

You can set an item in inventory as active or inactive, depending whether or not you are going to sell that product at the time.

Specify Stocking Locations

The software allows you to specify where a particular product is stored (in a specific warehouse, for example).

Track Inventory

The software allows you to browse through all your inventory items and view which items you have on-hand and what you have on backorder.

Set Inventory Levels

Specify how much of an item you want to continually have in inventory. Once the product reaches this level it is either put on a list for future purchase orders or an alert is sent.

FIFO/LIFO Cost Methods

FIFO stands for first in, first out. This cost method assumes that the first items purchases are the first items sold. This way, stock is rotated. LIFO stands for last in, first out. This method assumes that the last products purchased are the first products sold.

Average Cost Method

Takes the average value of the product and uses that as a basis to figure out inventory.

Specific Cost Method

Uses the cost of the item at the moment of purchase to figure out inventory.

Create Drop Shipments

A request for shipments to be sent directly from the manufacturer to customer after in stock; the transaction is made through another party.

Inventory Assemblies

Option to group items together into kits. This prevents ordering too much of one item and not enough of a complementary item.

Inventory Adjustments

The accounting program can change the minimum and maximum inventory levels quickly and find out which items are in stock, change the stocking locations, and set items as active or inactive.

Banking/Reconciliation Module

Reconcile Accounts

Comparing figures that are on the books of your company with the figures at your bank, and then finding the reasons for the differences.

Prepare Bank Deposits

The accounting software allows you to prepare bank deposit slips that can be mailed to your bank.

Void Existing Checks

Ability to void negate a check you've written.

Electronic Deposits

Ability to deposit money into your account directly from this software.

Time Billing Module

Integrated Tracking Timer

The accounting software has a timer integrated into the product; you can track time spent on tasks precisely.

Time Tickets

The accounting software can make time tickets or time invoices for a particular job.

Expense Tickets

The accounting software can make an expense ticket to show how much a job will cost before complete.

Weekly Time Tracking

The accounting software will display time tracking for an entire week.

Daily Time Tracking

Use to track time worked by non-employees (short-term contract labor).

Job Costing/Management Module

Job Tracking

Use to track the progress of the jobs that you are undertaking.

Set Job Status Active/Inactive

Able to set and display which jobs are active and inactive.

Create Estimates

Use to create a cost estimate of a particular job so that you can decide if the job is worth doing.

Additional Services Offered With Software (May Cost Extra)

Credit Card Processing

Credit card processing allows you to accept credit cards for transactions over the Internet or at a retail business.

Customer Support

Some accounting software manufacturers provide free customer support through telephone, email, or fax. Others charge a fee.

Payroll Service

Figures payroll for the company.

Remote Access

Allows remote connection to your accounting software (you may access your software from a different location, like your home computer).

Checks and Forms

This service allows you to custom design checks, forms, invoices, purchase orders, bank deposit slips, and other documents.

Print Postage from Software

Prints all postage directly from your computer to the envelope or label (must be arranged with the postal service).

Direct Deposit

Employee checks may be automatically deposited into bank accounts.

Reporting Services

Handles your accounting reports.

Online/Remote Data Backup

Allows you to backup data on a server over the Internet. Your data will be safe if your workplace computer crashed.

Fixed Asset Solutions

This service will help you to manage company assets, but there is usually a limit on the number of assets. A small business may only need a service that handles under 1,000 assets.

Time Tracking

Tracks miscellaneous jobs and hired help. It will track how long it takes and the cost of the job.

Tax Service

This is an extra service that allows you to file all of your taxes for the current year.

Electronic Payment Service

This service is available so you can pay all your bills and debts electronically so you don't have to write out checks.

Miscellaneous Features

Import/Export Info to Software

Import and export information to or from your software, such as downloading your monthly account information from your bank.

Choose Between Cash/Accrual Accounting

Accounting software that offers you a choice between these two common accounting methods. For more information on Cash vs. Accrual Accounting, click here.

Data Backup

Allows you to update accounting data, including your company information, revenues, and accounts.

Scedule Report Run Time

Make a schedule so the accounting software will automatically run your reports.

Daily Planner/To Do List

Use to plan what tasks to do each day. You can analyze sales, manage checks, view all appointments, and other tasks.

Support/Help

Help Documentation

Most accounting software products have help built into their products. Context-sensitive help (with an easy-to-find button) are better than a large index.

E-mail

Some accounting software manufacturers offer email support.

Toll Free Number/Fax

Most accounting software companies don't supply a free customer support phone number but offer a regular phone number (and fax number).

FAQ's/Forms

Some accounting software websites offer FAQs (frequently asked questions) or forums where peers can share questions, answers and experiences.

Easy Upgrades

The software has upgrades that you can download and install so your product is up-to-date.

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