Accounting is something many business owners struggle with. However, every business needs proper accounting recordsat some point. If you're looking for bank financing, you're going to need your accounting data. If you want to sell the business one day, you're going to need your accounting data. Finally, if you're struggling financially and can't figure out why, you're going to need your accounting data. If your accounting system is unorganized and not helpful, it can be fixed. Today, we're speaking with Judy Keith about how to fix a broken accounting system. Judy has more than 25 years of business, accounting and bookkeeping experience. She is a certified bookkeeper with The American Institute of Professional Bookkeepers and is an Advanced QuickBooks Certified ProAdvisor and Trainer. For more information about how Judy can help you, visit ChoiceBookkeepingLV.com Proper accounting records are important in managing your business finances. Here's tips Judyshared with us on how to better manage your finances by fixing a broken accounting system.
Know If Your Accounting System Is Broken
You may not be aware if your accounting system is broken. If that's the case, ask yourself these questions;
- Did you have someone experienced with accounting set up the system?
- Do you fully understand how the system is set up and how it is used day to day?
- Do you periodically review the accounting reports yourself and understand them?
If you answered "no" to these questions, you may have an accounting system that's broken. You may encounter serious issues when you need that data and you should therefore focus on getting the system fixed now.
Identify What Is Wrong With Your Accounting
An accounting system is based on data.
- You enter data into the accounting system
- The accounting system processes that data, and then
- It provides that data to you in different ways,
- You use this data in your accounting system to produce various reports
Any experienced professional can see clues of what may be set up incorrectly by looking at these basic accounting reports in your system. This is how you can identify what exactly is the issue with your accounting.
Fix Your Accounting System
The specific problem in your accounting system depends on your specific business. However, there are a few specific situations that are quite common. Review your chart of accounts - Your chart of accounts may not be organized well.
- A chart of accounts is what is used to enter data into, in your accounting system.
- You need to have a good structure in place so that your data is structured well and can then be used effectively in your accounting system.
- It's possible to change the structure of your chart of accounts while still using the original data so you don't have to re-enter everything.
Ensure accuracy of data entered into the system - A second common situation is having incorrectly entered information. Below are a few examples;
- Your transactions may be entered incorrectly,
- Certain data may be missing, or
- Data may have been incorrectly removed
By first identifying what's wrong and then fixing it, you can ensure that the data you have in the system is accurate. From there, you need to put steps in place to avoid these issues in the future and ensure that your data is entered accurately.
Use The Accounting System You Paid For
Once you've invested time and money into fixing your accounting system, you need to ensure that you don't let the same mistakes happen in the future.
- Make proper accounting easy for your business.
- Have instructions for how you do things in your accounting system and how data gets entered.
- Have a process for how that data is entered and who's responsible, and finally
- Have a resource that you can rely on for complex situations that you're not sure how to overcome.
It's very easy to ignore your accounting, especially when business is good. But accounting is extremely important and is a tool you can use to grow your business if you have a proper accounting system that you consistently use.
Additional Resources and Next Actions
We encourage you to visit Judy's website ChoiceBookkeepingLV.com. She can help you evaluateyour accounting system and also answer your technical QuickBooks questions if you are contemplating using QuickBooks for your business's accounting needs.