Small is big on accounting

Small businesses lacking the time to balance the books are the target of nimble local software developers.

The IT industry suffered as companies tightened their technology budgets, but small businesses are still prepared to spend to balance the books.

Accounting software was acquired by 48 per cent of small and medium enterprises in 2002-03, according to a survey by the Yellow Pages. Software for "day-to-day operations" came in a distant second, bought by only 12 per cent.

The GST drove many small businesses to electronic bookkeeping for the first time and, three years after its introduction, a new round of software has hit the shelves.

MYOB and Quicken dominate the small-to-medium business space, but their efforts to move upmarket have opened the door for local developers, says Charles Alexiou, managing director of Sydney's Martex Software Solutions. Martex released its BusinessBreeze small-business accounting package in time for this financial year but is not looking to compete with MYOB and Quicken.

”We're looking at a totally different market, the micro market,” he says. “Those products have been designed by accountants and the challenge is getting the small-business operator to actually use them. Accountants use them and they love them because they can understand them, but a small-business operator does not go into business because he is good at keeping his accounts.”

While the tax changes initially looked like a bonus for accountants, it opened up the market for software developers.

”Accountants are realising their workload is just too much and they've had to let smaller clients go,” Alexiou says.

”That puts the person who needs the most help in a position where they will look at a software product . . . our software will produce data in a format the accountant can do something with.”

Watching small businesses struggling with accounting packages inspired James McKinnon to develop AccountZ Accounting Software.

”My key aim was not to produce something that was technically brilliant in accounting terms, it was really to try to produce something that a user could pick up easily and be trained easily to use.”

The first batch of GST-ready accounting software was “less than spectacular”, trapping small businesses in the upgrade cycle, says National Tax and Accountants Association chief tax counsel Robert Warnock.

”Mum-and-dad operations and corner milk bars bought software because they thought it would be cheaper to get a computer package to allow them to do their own quarterly BAS return than pay their accountant an extra four times a year. Since that initial surge, they just keep upgrading.” - Adam Turner