Because software is usually used for many years, it actually depreciates over time as far as the initial cost is concerned. But if there are annual fees or some sort of time-based licensing subscriptions, then the renewals themselves are considered as current assets. If however you’re using a SaaS service such as Merchant’s Mirror, then the product subscription would actually be an expense since you don’t technically own the software and the moment you quit subscribing, you no longer have access much like a subscription to a magazine or newspaper.

Definition(s):
Fixed asset, also known as a non-current asset or as property, plant, and equipment (PP&E), is a term used in accounting for assets and property which cannot easily be converted into cash. This can be compared with current assets such as cash or bank accounts, which are described as liquid assets. In most cases, only tangible assets are referred to as fixed.

In accounting, a current asset is an asset on the balance sheet which is expected to be sold or otherwise used up in the near future, usually within one year, or one operating cycle whichever is longer. Typical current assets include cash, cash equivalents, accounts receivable, inventory, the portion of prepaid accounts which will be used within a year, and short-term investments.

It depends on your company policy. Generally, corporations set a capitalization policy where a minimum threshold must be reached to consider a computer a fixed asset since some things depreciate so quickly, it’s better to treat them as an expense. Consult with your accountant on what a generally accepted threshold lies. We can tell you that if your threshold happens to be $500USD, then netbooks, and even some computers and laptops could be considered either an expense or fixed asset depending on what side the price fell.

Definition:
Fixed asset, also known as a non-current asset or as property, plant, and equipment (PP&E), is a term used in accounting for assets and property which cannot easily be converted into cash. This can be compared with current assets such as cash or bank accounts, which are described as liquid assets. In most cases, only tangible assets are referred to as fixed.

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In spite of people like us, whom look to provide a web based accounting product easier to use and simplifying many processes, at the end of the day the responsibility of the bookkeeping for your small business still relies on YOU.

That’s right. It’s amazing that in this business, we find that there are some businesses out there that still manage to go all year without entering a single entry until the end of the fiscal year where then there’s a mad scramble to fill in whatever entries there were for the entire year. Call us crazy, but that’s just nuts.

So with the New Year, perhaps one of your new resolutions for this fiscal year is to:

• Schedule out a set time slot every month to manage your books.
• Hold that schedule unless there isn’t any accounting to be done.

It sounds strange, but no matter how boring it sounds, or how difficult it may be to put in a few hours in the middle or at the end of the month, you’ll thank us later. Because nothing drives a person mad than trying to figure out whether or not the receipt from last January was part of a project expense or just a petty cash purchase.

Image via CrunchBase

In an effort to create more transparent support, and to just make it easier to answer questions about Merchant’s Mirror, we’ve decided to use Get Satisfaction as our support area. Get Satisfaction puts all of your support needs in an area where the power of the community weighs in. And since there are things coming down the pipeline that have to deal with community… (we won’t get into it here today although we can already here the half-hearted and playful boos), we decided that this was a good shift for us.

When you get right down to it, all small business is people powered, community driven, and the web 2.0 era has re-proven that fact. This allows both the corporate side to show that they’re listening, and not have to be repetitive with question answering which helps users find what they need, (maybe throw in some praise), and move on. The worst that can happen is when we hear about how some business shelled out hundreds if not thousands of dollars on accounting software to find that the company behind it never replies to emails or phone calls.

So if you have questions, comments, or whatever, just head over there and find out what you want to know. If you want to keep it private? There’s a place for that too.

Having been a small business owner, I can definitely tell you the amount that I have saved in using web based services is incalculable. One of the cost effective moves I made was to move a lot of my administrative costs such as email and business office tools like my small business accounting to web services. This allowed me to conduct my business anywhere in the world while I traveled and didn’t have to carry a heavy duty laptop. Instead a netbook, or mobile device was all I needed to keep on top of the business while at conferences and meetings. And you can find Internet service pretty much anywhere in the world through hotels, coffee shops and Internet cafes.

Online services in the end provide a way to streamline your business costs into manageable amounts a month instead of huge fees that hit you on an annual basis. And when your monthly service fees multiplied by twelve are less than your previous annual fees, that’s when you realize that there are products out there that you should be avoiding unless there’s an absolute need for it by your business.

There are very simple reasons, but in the end, you’re actually looking at cost effectiveness from a small business owner’s point of view, that alone could be one of your key decisions in going with an online system. Obviously, there is also the disaster recovery, data backups and all of the good things that come with an online accounting package.

From our perspective, it’s actually easier to manage from a customer relations perspective. There isn’t the problem of asking what “version” you’re on, since what you see would be what the support personnel sees. The entire production system is always available to support without having to ask you for version numbers, training the support personnel on all the versions, and determining when to retire support for an offline version. In fact, it’s a tremendous win-win since it allows both parties to concentrate on solving the problem at hand instead of futzing with the details of versioning and inter-version discrepancies.

From an accountant perspective, it’s also better off because you can review the business without limiting the business owner from operations. One of the worst functionalities of offline locking is that the business owner is thrown into a constraint that is limited by their accountant. No longer is that an issue, due to the fact that the accountant can work concurrently with their client.

All-in-all, from our operations view and customer’s, it makes it an absolutely easy choice to make. Savings in both money and time should be the top two considerations of any business. And that’s exactly what we offer.

Which don’t get me wrong, that’s a great thing. But having owned several small businesses, I can say that the outside of open-source where you couldn’t complain about the price, those that you paid for were mediocre at best. The reasoning was that while the function that it served was perhaps the best in its field, the subscription models added up. As you pushed your business growth, you add more and more products together and thereby making it less affordable to run your business due to a subscription for this, and a subscription for that, for all of them to interact together.

Fortunately, we heard that call too. Why should a business look at their accounting broken up into pieces? Financials should be kept under one roof and provided for in one arena. And that’s what we strive to do for our small business clientele. Don’t forget that I definitely have felt your pains. It’s not easy and you have to count every single penny to make your business fly. So let us be your one stop shop and help you soar.

Photo Credit: (sylvar)

In fact, it wasn’t until I understood the cash-flow report that I was able to grasp the financial fundamentals of my business. Before then, I didn’t know what I was doing or where the business was headed.

My accounting software not only helps me manage and track the different financial transactions, but it also helps me measure the business performance.
Accounting system software provides many benefits to small businesses. Here are some of the key benefits, in my opinion:

• Speed: they are designed to speed up financial procedures.
• Automation: simple accounting software will automate your transactions, which helps eliminate mistakes. And since there’s no paper-intensive workload, it also frees up time to focus on more important activities to grow the business.
• Appraisal: allows you to measure your cash flow / financial performance.
• Forecasting: It provides management with a detailed picture of the company’s financial position for planning and budgeting.
• Convenience: a web-based accounting software allows you to take care of your accounting at the office, at home, or even during vacation, 24-7.
• Email capability: save money on postage! With software for accounting that has e-mail capability you can send invoices by email. No more trips to the post office.

In general, accounting software is essential to track sales, provide estimates, invoice customers, manage projects, and run your business more efficiently.

Now nearly every week, someone asks me one of these questions: “How did you start your business?” “What steps do I need to take?” “How do I get an EIN number?”

Launching your own business can be one of the most exciting and rewarding things you’ll ever do. It certainly has been for me. Of course, it does take some serious thought and planning.

So, here are some key steps (the way I see it) to take your business idea from fantasy to reality:

• Brainstorm your idea. First, make sure that you’re truly excited about your business idea. I believe deeply in this. The more passionate you are about your company, the more likely you are to succeed. Next, do your homework. Is there a growing need for the product or service you want to sell? How can you set yourself apart from the competition?

• Protect your idea. Have you come up with a great new name for your company? A revolutionary idea for a unique product that will change people’s lives? First, pat yourself on the back. Then, visit the U.S. Patent Office to register—and protect—your idea.

• Choose your business structure. Will you be a sole proprietor? Form a partnership with a friend or colleague? Create a corporation or limited liability company? Investigate your options.

• Get an employer identification number (EIN). This unique number—also known as a Federal Tax Identification Number—will be used by the IRS to identify your business. If you’re a sole proprietor, your social security number may suffice. Take this short quiz to determine whether you need to apply for an EIN.

• Open a business checking account. You’ll need to show proof that you own a business, so check with your bank to see what paperwork they require.

• Create a business plan. You need a roadmap to get to your destination, so don’t skip this important step. A business plan details your business idea, your target market, your team, key milestones, how much money you’ll need, and more. Not sure how to start? Watch the Small Business Administration’s 30-minute business plan webinar.

• Secure funding. Funding options range from personal savings or money borrowed from friends and relatives, to bank loans and venture capitalist funding. Fully investigate your options.

• Market your product or service. If you have a big budget, there are endless marketing options available, from billboards to television advertising. But even small startups can gain visibility, thanks to the Internet, which is leveling the playing field. Building your website is key, but bolstering that with a presence on social networking sites—such as Facebook, Twitter, and LinkedIn—can generate even more buzz.

• Accounting Software. And, of course, [ =) ] you’ll need an accounting system software to help you keep track of your expenses.

Lastly, I would like to recommend everyone thinking about starting a business to go see the great people at SCORE (Service Corps of Retired Executives). They have been a tremendous support. They offer free business coaching, and they have local offices all over the United States!

There are five things you should be looking for in your new accounting system software program if you want to relax and have a long and happy life together.

Your web-based accounting software should be:

•    Simple to use
•    Accessible from anywhere
•    Compatible
•    Secure
•    Affordable

Simple to use. Let’s face it.  You’re a business owner, not an accountant.  So what good is having a program that doesn’t speak your language? You want to find simple accounting software that includes all of the basic features you need to run your business: such as customer invoicing, bill payments, reports, payroll, and banking.  It should also be customizable to fit your particular business needs and not the other way around.  It should allow applications such as customizable invoices or automated email messages.  This way, you can communicate using your logo and your marketing strategy.

Accessible from anywhere. You want a program that is both online and offline compatible.  Web based online—so that it can be accessed from anywhere, as long as you have an Internet connection—and, it needs to be available offline too, so you can still work when you cannot get a connection; you can always save your work and update it when you get back online.  You should also be able to share data in real time—and at the same time—with other users anywhere in the world.

Compatible. It should be compatible with all major operating systems (Microsoft Windows®, Apple Mac OSX®, and Linux) and all major web browsers (Internet Explorer®, Firefox®, and Safari®).   It should also include all upgrades, bug fixes, and feature enhancements as part of your subscription. Software development is constantly changing and improving, so you shouldn’t need to worry about upgrading or having to buy the next version every time an upgrade is available.

Secure. If your data is stored on a file server in your office, you are setting yourself up for several unsafe situations that could be avoided.  A good web-based accounting program protects you from fire or from theft, be it physical theft (intruders that could steal your computer or backup files) or cyber theft (hackers that access your files electronically.)

Affordable. Most online accounting programs are surprisingly affordable, charging just pennies a day for lots of user-friendly features.  That’s a very small price to pay for peace of mind.

Keep these five simple rules in mind when shopping for a simple accounting software, and you will be able to concentrate on more important business matters like making a profit.