Expert Consultants Can Get Your Accounting System Set Up Perfectly
Setting up a proper accounting system is very important for your company because it is the system that will throw up information that you need to run the company properly. When you set up a computerized accounting system it will help you greatly in analyzing your data and getting the latest information without having to browse through many pages in the book. Using the automated accounting system is fine. But creating the account heads, in the beginning, could be a challenging task. You have to make different files for each account. Only when you set up the account can you get the full benefit of the software. The setup of the accounting system is best done with the help of the service provider so that your operations will be easier.
What Is The Need For Setting Up An Accounting System?
Though everyone is talking about a computerized accounting system you should adopt one only after getting fully convinced about its benefits. You should know how it will help you in maintaining proper accounts and whether it is suitable for you. Before we go into that let us understand what an accounting system is. An accounting system is a way to collect, storing and processing data that can be used by the management. It is a system comprising of both manual and computerized activities that will help in generating information that is helpful for the management.
Accuracy is the advantage of an automated accounting system. It will ensure that there are no errors when a figure is being entered multiple times. With the software, you need to enter only once and the same figure can be used in various documents and to extract different types of reports and statements. It will avoid calculation mistakes and help to give accurate information using a balance sheet, profit & loss account, etc.
The software helps to save time and improves productivity. There is no need to make multiple entries. Reports are generated quickly without any errors. The productivity of the company improves because of the quicker availability of information. You can get any report at the touch of a button. Another big advantage is that multiple people can make entries at the same time saving a lot of time. Many people in your office can use the same software simultaneously.
The integration of data is very easy. Suppose you have many branches, with computerized accounts it is very easy to merge all the accounts and get the complete information of the company. It is also helpful if your company is acquiring another company. With manual entering of accounts, it can take months to integrate both. The use of software can help to merge the accounts very quickly.
Small and medium companies benefit a lot because they have only a very small staff strength. For them, the software will prove to be a benefit because it can easily handle the work of many people in a very short time. Creation of invoices, credit notes and receipts can even be automated in many of the software packages. Many packages will also help to automatically update your inventory when the invoice is made.
The Process Of Setting Up An Account For A Small Company
The first thing to do is to keep all the documents about your business ready. This will include invoices, receipts, bank statements, bills, assessments, and government papers. You can check with your accountant whether these are relevant to your business. If there are other related documents you must keep them ready too. It is better to purchase a date stamp to affix on the documents as and when they are received so that you know when you have got the document in your hand.
Filing is a crucial part of the accounting system. You must purchase files and folders to hold your documents. You must have different files for your sales invoices, purchase invoices, government assessments, and other documents so that it is easy for you to access them whenever you want. It will be good to have files of a different color for each of these because that will make it easy for you to pick them up whenever you want. Filing regularly will help to have everything in order instead of trying to find everything in a hurry. Documents that require your attention and action should be kept separately.
Find Out The Accounting Requirement Of Your Company
For this, you must have an idea of how many transactions you will be doing in a month. You must also analyze the volume of business that you will be doing. Your cash and time limits will be the other determining factors. This is where you actually need bookkeeping. You can do it yourself or outsource to a service provider. It is wise to consult a qualified accountant when you set up your accounting system. You can also get advice from the accountant about financial reports and preparation of tax returns.
How To Select The Right Software For Your Accounting System?
There are many things you should consider when selecting accounting software for your company. Once you start using the software then it is difficult to change. Your purchase decision should be taken after considering many things. The first thing to understand is that for a small company subscribing to cloud-based accounting software is more beneficial as it is less expensive. It will also allow you to scale up the operations. You don’t have to invest a lot in the beginning. You can get packages with different features.
The first thing you must check is whether it allows multiple users. When you have multiple user accessibility you can have entries made by the people in those departments whenever they have an entry to be made without having to wait for the accountant to make the entry. Multiple user facilities also can give you the freedom to restrict or allow access to different employees. Many of the packages have a limitation on the number of users and additional users can be added by paying extra.
Check whether the package has a mobile app available. This will be needed for you to access the account on your phone when you are out of the office. This is very useful for you to know any details when you are outside. If you are with a customer and want to know some details the app will allow you to find it out easily. You must also check what you can view on mobile phones. Some packages only allow selected functions on the mobile app.
Different packages will offer different features. Most of the small companies can do with basic features. Generating invoices, tracking expenses, generating financial reports and customer management. If you are selling many products you may want the software to track your inventory also. There are some packages which can automate many of your functions. Some can automatically send reminders to your customers or create repeat invoices at the scheduled time.
You can also check whether the package can integrate with existing software that you are using. Some companies may have installed software for the management of customers, payment processing, etc. You must make sure that the software package that you are subscribing to is most suitable for your business.
Entering The Data In The Software
Once you have finalized your software, the next thing to do is to enter the data. As the software is a readymade one you may need to customize the software to your needs. This may need the support of an expert. The accounting consultants may be able to help you with this. They will also help you to create the account heads and product lists in the beginning. It is a job that should be done very correctly. Once the setup is done well, then you can continue doing the entries without any issues.
It is very important to make all the entries as soon as you have prepared a document. Whatever financial transaction takes place must be entered immediately so that no entry is missed. This will help you to maintain the accounts in the best manner. Reconciliation of bank accounts must be done regularly. This will help to check any errors or fraudulent activities. All other components like foreign exchange, depreciation, accruals, etc. must be entered at the month-end if you want your reports to be accurate.
Generating Reports And Analyzing Them
The main reason for setting up an accounting system is to generate reports that will help to know the company’s position and make changes if needed. This means that you must generate the reports periodically and analyze them to see whether you need to make any changes in the way the company is run.
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