To compute what to pay your employees, get a payroll program.

To monitor which products you have in stock, get an inventory program.

To keep track of what your customers owe — how much you’re supposed to receive from them — get an accounts-receivable program.

To handle debts to your suppliers and figure out how much to pay, get an accounts-payable program.

To compute your profits, get a general-ledger program.

It handles several kinds of deductions: the federal withholding tax (FED), the Federal Insurance Contributions Act’s social-security tax (FICA SOCSEC), state taxes, local taxes, and payments to health and pension plans.

It prints checks to the government, to pay the taxes that were deducted and your state’s unemployment insurance. At the end of each quarter and year, it fills in all the payroll-information forms that government bureaucrats require.

If the program’s fancy, it counts how many employees are in each department of your company, totals how much money each department is spending for labor, and keeps track of employee vacations and attendance records.

Before buying a payroll program, check whether it includes a table that lets it automatically compute your state’s income tax.

It prints each product’s sales history, predicts when each product will sell out, and notices which products are generating the largest profits. By analyzing all that information, it determines which products to reorder and in what quantities.

For each product it says to reorder, it prints a purchase order, to mail to the supplier. It keeps track of whether the supplier has sent the requested goods.

At the end of the year, it totals the dollar value of all the products in the inventory, to help compute the value of your business and your tax.

For each customer who pays immediately, the program prints a receipt. For customers who plan to pay later, it prints a bill (for services) and an invoice (for goods).

It notices which bills and invoices have been paid. It sends dunning notices to the customers who are late in paying — the ones that are past-due. It refuses to accept orders from customers who are past-due or reaching their credit limit.

It computes a finance charge for customers who pay late. It gives discounts to customers who pay quickly or buy large quantities.

It records each customer’s name, address, phone number, and buying habits, so your sales force can talk the customer into buying even more. It records your salesperson’s name, and computes the salesperson’s commission.

Before your company services a customer, the program gives the customer a written estimate of the cost.

The program delays payment as long as a supplier allows, so that you can temporarily invest that money in your own business, without requiring bank loans. That’s called, “making full use of the supplier’s line of credit”.

The program stores each supplier’s name, address, phone number, product line, and discount policy, so you can purchase easily and wisely.

It prints a variety of profit reports for your stockholders, bank, financial planners, and government. The reports show the results for the day, week, month, quarter, and year.

It tracks each department’s budget, to make sure that no department spends too much. To protect your money from being stolen or embezzled or lost, the program performs double-entry bookkeeping: whenever it credits money to one account, it debits the same amount of money from another account, so that the books balance.

It compares your current profit against earlier profits, and each current budget item against previous budgets. It tells how much your business is improving or declining. It even tries to predict your business’s future.

The first version of QuickBooks was incomplete, but the newest versions contain lots of features. Yes, QuickBooks now handles all 5 accounting functions (payroll, inventory, accounts receivable, general ledger, and accounts payable) and is flexible enough to handle many situations.

You can get either the standard version ($100) or the Pro version (which adds time-billing, estimating, and job-costing and costs $200). You can get QuickBooks on either floppy disks or a CD-ROM. (The CD-ROM contains extra tutorials and reference materials.)

Not sure whether you want QuickBooks? Then get a trial version free (with free shipping, too!) by phoning Intuit. The trial version contains the full features and can be used 25 times, after which it self-destructs. Any data you generate with the trial version can be transferred to the full version.

For more info, phone Intuit in California at 800-446-8848 or 415-944-6000.

20 years ago, back in the 1970’s, Peachtree was the first full-featured accounting program for microcomputers. It used to cost about $5,000; but because of competition from newer, cheaper packages (such as Dac Easy Accounting and later QuickBooks), the price has dropped to $200, and the quality has improved further. At $200, it’s a terrific bargain. It uses traditional accounting jargon but tries to explain it well. It’s harder for novices than QuickBooks, but it makes accountants feel more comfortable. You can buy a stripped-down version, called Peachtree First Accounting, for just $50; but if you’re going to strip you should get QuickBooks standard instead, which wins all awards from reviewers who’ve strip-searched. For more info, phone Peachtree Software (which was bought by ADP) in Georgia at 800-228-0068 or 770-724-4000.

It was delightful and came in a box that looked like a can of light beer. Discount dealers sold it for just $42. But it was limited: it couldn’t handle payroll or inventory, couldn’t handle big companies (since it limited most database files to 500 records each), and didn’t print well on laser printers, though it handled dot-matrix printers fine. It used MS-DOS without Windows. (A Mac version was invented but was more confusing.)

Folks who were used to the manual system like One-Write Plus. It was published by Evergreen Software, then by NEBS, and now by Peachtree. It’s not as full-featured as QuickBooks or Peachtree Complete Accounting.

1. To understand accounting packages fully, you must understand the theory of debits and credits, which is complicated.

2. Those accounting packages work best if your company’s an intermediary that buys from manufacturers and resells to stores.

If you run a retail store where most customers pay cash, you’ll complain that the accounting packages don’t automate your cash register or automatically copy data from cash-register slips to the sales records and inventory module. If you run a non-profit organization, you’ll dislike how the accounting packages keep bragging about your “profit” instead of how much you’re “under budget”. If you run a doctor’s office, you’ll regret that the accounting packages don’t record your patient’s medical histories and needs, don’t fill in the forms that your patient’s insurance companies require, and don’t handle multiple payers (in which the patient pays part of the bill and several insurance companies split the rest of the bill). If you run a consulting firm that dispenses services rather than goods, you typically won’t need inventory or accounts-payable modules, and many items in the other modules will be irrelevant.

3. Each company does business in its own unique way, whose peculiarities can’t be handled well by any general-purpose accounting package.

For example, your company may have a unique way of offering discounts to customers. To make the computer automatically compute those special discounts, you must write your own program; but then you’ll have difficulty making your program transfer that discount info to the accounting package you bought.

Because of each company’s uniqueness, the typical company avoids generic accounting packages and instead hires a programmer to write a customized program, by using a language such as BASIC or DBASE.

4. General-purpose accounting packages print standard reports but don’t let you invent your own. Instead of using the reports generated by general-purpose accounting packages, many managers prefer to design their own reports, by copying the company’s data into a spreadsheet program (such as 1-2-3, Quattro, or Excel) or data-management system (such as Q&A, Approach, Access, or DBASE) and then “fiddling around” until the report looks pretty. General-purpose accounting packages don’t let you fiddle.