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Accounting System Tips
A real time saver - copying customer checks.
Invariably a customer payment history is going to have to be researched. And a history is only as good as the trail. So where possible, copy customer checks or voucher stubs and maintain with customer records or deposit slips for miscellaneous receipts.
Accounting clerks are keys to success.
Accounting clerks are an integral component of your accounting staff. A good A/R clerk or A/P clerk is like a good mechanic or plumber. You may not know exactly all the things they do while performing their specific task, but the job just gets done and it gets done right.
Condense P&L detail into categories.
While your chart of accounts present important detail, try to group these into categories. There is no right number; however, between 6 and 10 is ideal. General categories include revenues, cost of sales, personnel costs, administrative costs, facility & equipment costs and other income & expense. Segregate owner costs if they deserve segregation. And setup industry specific categories should they exist - research & design and selling & marketing.
Do not commingle accounts.
Try at all times to run business transactions through business bank and credit card accounts and run personal transactions through personal bank and credit card accounts. Commingling transactions creates unnecessary and costly accounting reconciliation hassles, and in some instances, pierce the corporate or limited liability company shield. And thus, subject the business owner to unwanted litigation and taxation risk.
Limit your chart of accounts and let the detail reside in the general ledger.
All too often business owners make the mistake of allowing their chart of accounts to grow and grow and grow. It is far more efficient to have fewer accounts, which in turn will make analysis clearer. And accordingly, you may save considerable professional fees at year-end if revenues and expenses are allocated concisely.
Never underestimate the power of reconciliation.
Timely reconciliation of bank accounts, credit cards and other account balances provide key information regarding your banking, lender and certain vendor relationships that may be otherwise unknown. Service fees eat up profits. Make your service providers accountable.
One banker box per year.
Record keeping needs perimeters. Therefore, keep all statements, receipts and correspondence and segregate accordingly in a single banker box. Adequate record maintenance greatly assists at tax time and is critical at times of death or disability.
Proper accounting is the basis for all returns.
Every sales tax, payroll tax and income tax return is derived from one sort of accounting or another. Even for your personal property declaration return. Therefore, it is imperative that you maintain complete and accurate accounting records documenting your sales, your personnel costs and your equipment purchases in addition to all other business transactions.
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