If you're keeping business books using Excel and Word, you'll be happy to learn there's a better way. Microsoft has announced Office Small Business Accounting designed to take on Intuit’s QuickBooks

The new Microsoft Office for small-business management product bundle will include the familiar Office 2003 applications along with a new financial management product called Microsoft Office Small Business Accounting and an updated version of Outlook 2003 with Business Contact Manager, Microsoft said in a statement on Friday.

With the new Office edition due out at the end of 2005 in the US small businesses will be able to manage customer, financial and business processes, according to Microsoft.

For the smallest businesses Microsoft today offers a simple chequebook-type application called Money Small Business. The next step up is Small Business Manager, an entry-level ERP (enterprise resource planning) product.

"There is a gap today where people need an entry-level accounting system, but don’t need entry-level ERP," said Steven Guggenheimer, a vice president in Microsoft's Small and Midmarket Solutions & Partner Group.

The new product combines accounting with business contact management and Office functionality, Guggenheimer said.

"There are stand-alone accounting applications out there today, but they do not connect very well with the other applications most people use in their business. They don't have the seamless connection with contact management or Excel, which some people use for their accounting," he said.

Among the features of the new Microsoft application combination is the ability to mark hours as billable when a calendar entry is created in Outlook. This information can then easily be transferred to the accounting application, he said.

Another feature is easy invoicing using Word. Data from the accounting application can be pushed to Word for use in invoice templates, Guggenheimer said.

Microsoft will offer tools for QuickBooks users as well as users who do their accounting in Excel to migrate to the new Microsoft Office suite, Guggenheimer said.

Aside from winning more customers for its business products, the expansion of the Office suite lineup also fits in with Microsoft's strategy to grow its Office business by tailoring product bundles for specific audiences.

The vendor already sells a Small Business Edition of Office 2003, introduced last year, which includes Excel, Outlook with Business Contact Manager, PowerPoint, Publisher and Word.

Microsoft pitches the new Office Small Business Accounting product in the bundle as an opportunity for partners. Other software makers, or independent software vendors, can offer vertical and horizontal applications on top of the new Microsoft accounting software.

Part of the new suite, the updated Outlook with Business Contact Manager will include support for peer-to-peer networking to share contacts, support for the new Microsoft Small Business Accounting product and support for Pocket PCs, Guggenheimer said.

Microsoft did not disclose pricing information and said it is too early to discuss plans for international availability of Office for small-business management.