Search JAT Search tips

Whether the owner of a large translation agency or a sole proprietor/translator working out of the home, income must be received, expenses must be paid and accurate accounts of all financial data must be provided to the tax man or tax woman. We translators have at least some experience tracking our personal accounts, but when it comes to accounting for our businesses, those of us with no accounting experience are suddenly faced with new issues such as invoicing, tracking services, vendors, and customers, and collecting and paying sales tax. As a business grows its accounting needs grow proportionately, requiring, perhaps, financial reports and payroll functionality.

Like some other translators who may be more interested Kanji than calculators, I'm no accounting expert. But as Fred Uleman reminded us a few articles ago, "We are in the translation business" (with emphasis on the business) and need to keep books like a business. To help maintain accurate records that any tax auditor would smile at, translators need inexpensive tools that are easy to use and offer functionality commensurate with their size and type of operation. This article gives a very brief overview of accounting tools that are currently being used by at least some members of JAT and highlights some functions of QuickBooks 2003 as an example of what a dedicated accounting software tool has to offer. Consider this a starting point for translators who want to find out what accounting software options exist, and which of those options might be useful in their business.

Dedicated Accounting Software: Just a Prettier Spreadsheet?

A question that I asked myself right away when I recently started as a freelance translator was whether in fact I needed accounting software at all. After all, Excel and/or Access provide all the functionality needed. My answer to that question was, "yes, for three reasons." First, I simply didn't like using Excel templates for invoices, and wished for a another option. Second, I imagined that setting up a spreadsheet and database sophisticated enough to handle present and future business needs would be a time consuming task, and prohibitively difficult. Finally, I was concerned that even if I had the time and skill to "program" Access or Excel to do the job, my lack of accounting knowledge would cause me to miss something important that might come back to haunt me at tax time.

Notwithstanding my list of reasons, I wondered how other translators had resolved the question of whether to use MS Office or some other software program. To help gain some perspective, I conducted an informal email survey of JAT/Honyaku members. With only thirteen participants, my data will not be on Scientific American's holiday wish list. Nevertheless, I felt like the results put me in the ballpark. (Survey Results) I discovered that slightly more than half of the respondents use a dedicated accounting program, and about a third use Access and/or Excel (the remaining 2 respondents use FileMaker Pro and "nothing," respectively). However, reasons given for choosing Access/Excel tended toward the apologetic: "I couldn't justify the cost of additional software," or "Not convenient to purchase dedicated software now, but may do so in the future."

But for me, the nail in the Access/Excel coffin was the fact that most respondents who use those programs did not recommend them to other translators—at least not with much conviction. On the other hand, satisfaction seemed to run slightly higher among users of dedicated accounting software; most of those users did recommend such software to other translators. They cited reasons for choosing their particular brand of accounting software such as "my accountant uses it," "ease of invoicing," and "has all the functionality I need." Incidentally you might ask, "What functionality does one need?" That's a hard question to answer if you're just getting started and aren't sure of the difference between a deduction and a debenture. Read on for some hints.

No Übertool

After deciding that a dedicated accounting software solution was my cat's meow, the next step was to shop around for one (not a meow, a software solution). There are many packages out there, so I was hoping that there would be a clear front runner. That way I could remain blissfully ignorant and quickly click "Add to my shopping cart," and be done with it. Although it wasn't that simple to identify a front runner (the reviews for the "famous" products were mixed, and there seemed to be a surplus of second-tier contenders), in the end I chose what was clearly one of the more popular programs (QuickBooks). If you agree with my follow-the-lemmings shopping strategy, I suggest you take a look at the three most popular tools mentioned by my survey respondents. They all come generally recommended. On the other hand, if you want to do a more thorough search of the other products that are out there, here's a link to a Web site I ran across to help you shop (I haven't tried it myself): www.findaccountingsoftware.com.

Summary of Responses from Informal JAT/Honyaku Survey:
Users of Dedicated Accounting Software

( ) = Number of respondents.
QuickBooks: http://quickbooks.intuit.com/
Yayoi Kaikei: http://www.yayoi-kk.co.jp/
PCA Kaikei: http://www.pca.co.jp/
These comments have been greatly abbreviated for this table. See Survey Results for full original responses.

Interestingly, the top two choices (QuickBooks and Yayoi) were both owned by Intuit until this year (2003) when Yayoi split off into its own company. Since both claim to be the most popular small business accounting software available (presumably in their respective language-regions) you might base a comparison between the two on whether you prefer a native English or Japanese interface. Price is another factor. QuickBooks ranges from $200 (US) for the Basic Edition to $3500 for the Enterprise Edition, with Yayoi coming in at \40,000 for their Standard package and \80,000 for the Professional version. As far as I can tell, PCA Kaikei starts around \250,000, and can reach five times that depending on the configuration (when packaged with SQL clients).

A Glimpse at QuickBooks

OK, so now you think you might prefer dedicated accounting software to a spreadsheet, and you might have even decided which product you want. But before you make the investment, you need at least a little better idea of what the software can do and how you will interact with it. I'll try to fill in some of the blanks for you by describing the functions of QuickBooks and some of the ways that I use it in my accounting tasks. Take this as an example of the kinds of functions you might find in any package, and not a recommendation (or condemnation) of QuickBooks per se. Incidentally, I am not associated with Intuit or any other software company.

The Chart at the Heart

The heart of this program is the chart of accounts. It is a list of all the accounts that QuickBooks (hereafter, QB) uses to track any and all transactions that you enter (and even many that you don't). At first I thought that an "account" must be a monetary holding tank registered at an institution such as a bank account, checking account, or mutual fund account. In fact, an account is all of those, but more generally speaking it is simply any record of funds, value, equity, or liability that you wish to keep, and may or may not correspond to actual money in the real world. For example, I keep an account of the original cost of my computer, and a separate account of its depreciated value. There are accounts receivable for unpaid invoices, and accounts payable for unpaid bills. When you set up your company in QB, you can have the program semi-automatically (*1) create the accounts that you are likely to use, and later manually add or delete accounts to track the items in the way that is most helpful to you (and the tax office). Any name can be given to an account, but it must be assigned one of a fixed number of types, such as Bank, Income, Expense, or Fixed Asset. You can double-click any account appearing in the chart to open a window for viewing or entering transactions related to the account.

(*1) The program "interviews" you about your business to determine the accounts you probably need to track.

Figure 1. The Chart of Accounts (Full size.)

Itemize Your Wares

Translators don't simply sell translations, we sell translations of documents in Word, Excel, PowerPoint, HTML, and other formats. We sometimes also sell editing, proofreading, writing, and desktop publishing services. All of these services can be entered into QB ahead of time as "items" for easy entry on invoices. Each item can be assigned a different description, type, account, price, and sales tax which is applied automatically unless you make last-minute manual modifications. When you track your services by item, you can easily generate a report that shows you what percentage, for example, of your sales consists of Word document translations and what the average price for those translations was. At the end of the year I plan to create reports showing, for example, exactly which kinds of translations account for the highest volume of my work. That could effect the way I charge for certain items, and what kinds of jobs I hunt for in the future.

Customers

QB lets you store information about each of your customers such as contact information, whether the customer is charged sales tax, and how the customer prefers to remit payments. Once customers are set up (and you have entered at least some activity with them), you can have QB instantly create reports such as income by customer, accounts receivable aging, customer balance, and open invoices. Especially if you have a lot of customers (lucky you!), this can help you analyze who your best ones are both in terms of volume and payment practices.

Invoice Templates

Now you only need one more piece of the puzzle to be able to start invoicing—an invoice template. QB comes with several ready-made templates that you can modify to your liking. For example, I added an 印鑑 field. I also wanted column headings to be in Japanese, and I was able to change the font and text at will. However, there are limitations that I wish to warn you about. QB lets you "email" a completed invoice to a customer in PDF format. But rather than sending the invoice as a standard email attachment, it is saved on an Intuit-administrated server somewhere in cyberspace, and the customer receives an email message with a hyperlink to view the invoice. In the process of automatically creating the PDF, the Japanese fonts that I tried became mojibake, forcing me to switch to romaji—not exactly ideal if you have Japanese customers. Another warning about invoice templates: You must have the Pro or Premier Editions of QB to be able to apply color and other stylistic elements to your invoice. The invoice formats that come with the Basic Edition are just that—very basic.

Fig. 2 The Invoice Template (Full size.)

Creating an Invoice

With items, customers, and a template ready to go, you can create an invoice very quickly and easily. Open the template, use drop-down lists to select a customer, due date, terms, comments, tax, and items, then type in quantities and descriptions, adjust pricing if necessary, and you're done. QB naturally calculates the total, and updates all relevant accounts such as accounts receivable. The invoice can be printed out to standard printer paper, preprinted invoice forms (Intuit is more than happy to sell you order forms), or "emailed." When you receive payments from customers, QB has a window that lets you match payments to invoices and record credits/debits for overpayments or underpayments.

Vendors and Bills

Vendors can be set up in QB just like customers. When you receive a bill from a vendor, such as the bill from your Internet provider, you select the vendor from a drop down list and type in the details of the bill (amount, date received, payment due date, and account you wish to use to track the expense). QB gives you a separate window to pay the bill, and lets you specify the account from which the payment is made. The point of entering all this detail is—you guessed it—the nifty reports that can be instantly generated from that detail. Accounts payable aging, vendor balance, unpaid bills, and transaction by vendor are some examples. This lets you see where your money is going and in what proportions.

Figure 3. Reports. A wide variety of reports that are available.
Just choose a menu command and the report is created instantly. (Full size.)

Banking

Depending on where you live and do business, you may have a checking account, savings account, credit card accounts, and perhaps a petty cash account. QB keeps track of all these accounts, and lets you record transactions into, out of, and between them. You can print checks, and reconcile accounts. Balances show up at the top of the chart of accounts so you always know where your money is. QB offers many optional online banking services which are probably not available to residents of Japan, but I imagine Bill Pay, online transfers, and the ability to download account information directly into QB might be useful features for some.

Employee Services

If your business has employees other than yourself, you may be interested in QB's payroll features. Since I am completely unfamiliar with these, I'll give you the description from the QB user's manual:

"QuickBooks can perform many different payroll tasks, including calculating wages and taxes, managing compensation and liabilities, and processing payments for both employees and payroll tax agencies. (To execute some of the tasks, you need a subscription to one of the integrated payroll services: Do-It-Yourself Payroll or Assisted Payroll.)"

Bells and Whistles

There are lots of other features too numerous to explain in detail, but I'll list some of them here to give you an idea: archiving/restoring data, exporting lists (not transactions, unfortunately) to Excel, creating documents for an accountant's review, entry in general ledger, transaction search by multiple criteria, setting up users and passwords, planning and budgeting, analysis tools for such things as profitability, an asset depreciation calculator, a "To Do" list with automatic reminders, printing mailing labels, generating receipts, processing finance charges, printing 1099's, accountant and tax reports…NADO.

Working with an Accountant

QB was designed to bring accounting to non-accountants (that word looks tantalizing similar to "non-combatants"), and Intuit claims that "no accounting knowledge is needed - just fill in familiar forms, like checks and invoices, onscreen." Well, I've been using QB for only 3 months now, and I seem finally to have a fairly good handle on it. Or do I?

Without professional advice, I am never quite sure that the way I have set up my books is the most efficient, conventional, or accurate way. In fact I have caught myself dealing with certain situations one way, only to realize later than I should have been dealing with them another way. The first time I set up my company in QB, I made so many mistakes that I had to start over from scratch and reenter all my historical transactions. To avoid the nagging feeling that you might be winging your accounting activities just a bit too much, you can work with an accountant. QB has an online database of QB-certified accountants who can help you, or even take over for you if you request it. This of course costs money, but at least one of my survey respondents recommends taking advantage of such services, despite the expense.

Some QB Cons

QuickBooks has a fairly good online help function that I have used extensively in a learn-as-I-go fashion. But when trouble arises, help doesn't come cheaply. From the reviews I've read, there is next to no free support even for installation problems, and the support plans are expensive. For that reason, I haven't been willing to contact Intuit about the problems below, and there may be simple solutions that I just haven't discovered yet. Fortunately, I have not encountered any problems that have brought accounting to a halt. In fairness, some do consider the support packages to be a good deal when you consider the value of peace of mind, and the savings when compared to the fees of a certified accountant (assuming the support staff at QB can pass as a good substitute for a "real" accountant).

Quirky Japanese Support

As mentioned above, at least some Japanese fonts don't survive the QB-executed conversion to PDF format on invoices. In addition, sometimes when I add items using Japanese characters (for example when adding my favorite Okonomi-yaki shop as a vendor), the item doesn't appear in pull-down menus as it should. Since you can't control the font used when adding items to lists, I don't see a way out other than to use romaji. (This doesn't happen every time, so I am hopeful there is a solution to the problem out there somewhere). Another problem is the QB spell checker. It tends to pop up automatically when uninvited, and detects any Japanese text as a misspelling. Fortunately, this function can be turned off. Finally, there is only sketchy support for Japanese currency. The yen sign can be displayed if your Windows regional settings are set to Japanese, but as far as I can tell you're stuck with a decimal point and two trailing zeros for sums of money on your invoices. As a result, I have to white out the offending snake eyes on printed invoices for one customer who requested it.

Upsell Hell

QB customer service...isn't. The fun starts when you register the product online—at least that's what you think you are doing. What you're actually doing is obtaining the phone number (not toll free if memory serves) to call and finalize your registration. When I called, I was subjected to a sales pitch for a service and support contract, and possibly other accountant services. When using the program, some menu commands do little more than display an advertisement for the functions you thought you were able to access immediately. You never know where these menu-landmines are hiding. Imagine pulling up the menu command Company Web Site. Might you not—if only for a second—think that this command was available at that moment to help you create or enhance your Web site? Actually, choosing the command displays a message for a Web site service that is no longer available. Gee, I can't even pay for functions I would never pay for in the first place.

Upshot

It took me awhile to "get" the point of using accounting software, but I think I "get" it now.

It's all about easy access to detail—for you, your accountant, and your beloved tax agency.

You can use a spreadsheet or paper and pencil to do a good job of keeping your bank balances in order. But in order to do any kind of analysis or manipulation of your accounts, you have to maintain multiple sheets/registers/ledgers, copy figures (which invites error), and worst of all you actually have to know HOW to do this. With QB (and I assume other programs as well), you only have to enter a bit of information once to be able to view that information from a variety of different angles and contexts. Using this software gives me the feeling (not yet tested) that I will be able to answer any question that an auditor might throw at me.

But will an auditor actually ever throw a question at me that a spreadsheet couldn't answer? After all, as a freelance translator my business is pretty simple. This is a question that only time will tell. What is clear is that the more complex the business, the more the cost of the software can be justified. For example in Japan, if you make the jump from free-floating radical to a registered 事業 then you need to provide balance sheets and other financial reports. QB can do that in a measly half a second, whereas creating one manually for the first time sounds like a half-day project. And if you grow to the point of hiring employees, payroll features are there to help. The true test of the usefulness of accounting software will be during tax time, and the fact that QB can interface with tax programs gives me reason to hope for the best. Perhaps a follow-up article will be in order from someone who has gone through this experience.

In Summary:

1. If you think you can get away with Access and/or Excel, a handwritten ledger, or ashen tally marks on a cave wall, by all means do so. Some who use these methods do consider them acceptable, and you can save a few bucks.

2. If your Access, Excel or accounting knowledge or your time is scarce, then consider a dedicated accounting software package. If you don't know where to start shopping for one, consider one of the popular tools mentioned in this article.

3. Choose a tool that fits your budget and needs.

Good luck and happy bookkeeping!

JAT Translation Topics

Top | Home | Feedback