A Blueprint for Implementing an Organized Accounting Report

As a business owner or manager, your books of accounts should always be in good shape because you need all the information you can get to make informed business decisions. In many cases, the difference between good and bad decisions is down to information quality, and your accounting standards play a major role in tracking your finances all year round.

If you want to implement a standard and organized account, there are necessary steps you should be willing to take to reach your goals. You may have all the receipts, invoices, and other relevant documents in your possession, but organizing them is a tricky affair. When the tax man comes, sorting your books becomes a headache if your records are not properly organized. Below is a blueprint for organized accounting implementation.

Account Separation

As an entrepreneur, you will be responsible for funding your business and all profits after tax and expenses will be yours. This creates confusion if you use the same accounts for funding the business and withdrawing its proceeds. If you want to maintain organized records for reference purposes, you should separate your personal accounts from business accounts.

Any expenses incurred by the business should be paid with the business account, while your personal effects should only be paid for with personal accounts. If you fail to make the distinction, you will find it hard to balance your books when tax season comes. You will not be able to accurately track small purchases; by extension, you can’t calculate how much you owe in taxes. As the business grows, so will your tax liabilities, so endeavor to open a separate bank account for your taxes.

Track Income & Expenses

The second element for an organized account is to track every income that comes in and expenses that go out; this is non-negotiable. As a small, up-and-coming business, tracking your income and expenses is easy, but once you begin to grow, more purchases will be made, and income earned, so relying on a haphazard approach will not work.

You should consider using a cloud accounting software to track your income and expenses because the process is automatic. You can track your financial status in real-time by looking at your books and using the same information to make financial projections and decisions.

In-House Bookkeeping System

Successful businesses implement systems that work for them, and you should do the same. Develop a bookkeeping system that fits your operations and modify it when necessary to reflect operational realities. You are free to develop a system that will work for you since no iron-clad system fits all business organizations. Ensure you give room for human error and create action plans to correct errors as soon as possible so they don’t ruin your records.

Using the right software will determine the quality of your accounts, so make an educated decision when selecting software.

Use Professional Help

You should also consider professional help if you are not an accounting expert. An auditor, financial planner, or accountant can help you create a system or recommend applications that suit your needs. Even if you don’t enlist professional help in the beginning, you will have to as soon as your business begins to expand. Furthermore, a professional may even help you create a system and manage your books for a few days or weeks until you or your delegated representative gets the hang of it.

Tax Responsibilities

Your books are not perfectly organized until you can understand your liabilities by looking at your records. Understand that tax requirements vary from industry to industry, so when organizing your accounts; be sure of the taxation standards before implementation. Furthermore, the requirements will depend on the business structure; the requirements for LLC are different for sole proprietorship, etc.

Scheduling

Lastly, when creating an accounting blueprint schedule your stocktaking and data pruning. Studying your records will help you evaluate the financial status of your business. You should also schedule regular meetings with your accountant if you have one to get professional insight into your financial status.

Conclusion

Creating an organized account goes beyond record-taking. You must also evaluate the records to ensure the business is moving in the right direction. Financial evaluation is very important to keep organized records and for forecasting. If you are methodical in your approach, your books will also be tidy and concise. When tax season comes, you will know how much you owe in taxes and how much income your venture has generated in any given year.