Although late to the UK market there are lots of reasons Microsoft’s new Office Accounting 2008 could carve out a substantial niche among small-business customers.

To start with you can download and use the Express edition of the software free of charge, which is a first for this country and an option that’s bound to encourage start-ups and micro businesses to use the product.

It’s far from a crippled version and the Express edition delivers a complete set of sales, purchasing and nominal ledgers plus Vat and payroll processing and Office integration. It’s Her Majesty’s Revenue and Customs (HMRC) accredited too, so you can file online.

You can also upgrade to the Professional product simply by buying a licence key over the web. Do that and you get multi-user access to the SQL Server Express database holding the company data, together with stock control, sales and purchase order processing, cashflow forecasting, multi-currency support and whole lot more.

Another advantage of the Professional version is in-depth integration with Outlook 2007 Business Contact Manager. And it really is in-depth, from sharing contact information to being able to view transaction histories, bill for time, create quotes and generate invoices - all from within Outlook. The competition may offer data synchronisation, Microsoft’s software goes the whole hog and lets you run your company from your email client.

Other features designed to win converts include an Outlook-style interface throughout and a Quickstart wizard to take you straight to the most commonly needed options. Task-oriented flowcharts like those in Quickbooks are also much in evidence, plus there’s support for Paypal and an optional Bacs payment service.

Reporting is, quite literally, a delight. Start with a summary report of, for example, customer sales and you don’t just get static data but the ability to drill down to see detailed customer transactions, even bring up individual invoices, simply by clicking on the associated entries. Data can also be exported and manipulated using Excel with support for dynamic pivot tables.

There’s a twist too when you subscribe to the optional payroll service - at just £9.95 per month, for which you’re given access to an online tax calculator. Payroll data can then be anonymously uploaded, the tax calculated using the most up-to-date tables and the results returned in just a few seconds.

We found Office Accounting 2008 quick to install and very easy to get to grips with although we did encounter a few problems. For example, you can import data from Sage but not Quickbooks, at least not if you’re a UK customer. Support for flat-rate Vat is another omission and the Word templates used to design invoices and other forms are complicated to customise.

Another issue is that, unlike Sage, you won’t find many accounting firms using Office Accounting. This is something Microsoft is keen to address with tools to enable professionals to handle data from multiple customers via Office Live rather than have to send files by email or in hard copy format. Moreover, while their accountants are preparing their year-end accounts, clients can continue to use their systems to run their businesses rather than have to freeze them.

Microsoft is also looking to encourage community support. Something that will take time, but the initial signs are good and, if it does nothing else, Office Accounting 2008 looks set to deliver a much needed wake-up call to the incumbent vendors.