My last blog entry was about QuickBooks, the program I personally consider the best on the market for small/medium business accounting. QuickBooks is a tool for keeping a business’s accounting records in order. But the program doesn’t work by itself – it needs someone in the driver’s seat.
I have seen all sorts of accounting records over the years. In the pre-computer days, there were ledger books, 13-column paper, and shoe boxes full of information. I’ve seen spreadsheets set up as check registers and hand written financial statements. The bottom line is to provide management accurate financial information to make informed decisions. Bookkeeping is the job that provides such information. The ultimate goal of any business is to make a profit, and keeping an accurate set of books is an invaluable tool for management to determine profitability. Many small businesses have one person performing the various functions of bookkeeping – check writing, making deposits, accounts receivable, accounts payable, etc. Some larger businesses may segregate various duties to individuals, such as having a dedicated accounts payable clerk. In either case, it’s been my experience that many bookkeepers have not been properly trained. They work hard and do their best, but without guidance, the books are inaccurate until the CPA prepares the tax return and makes adjustments to “clean-up” the books. That’s all well and good, but keeping the books current daily is what management needs. If the information isn’t accurate, that misinformation can lead to poor business decisions.
When I started out in public accounting, I thought I understood what it took to keep a set of books. But when I actually left public accounting for a while, I had two jobs in that period – controller of a union electrical contracting shop, and CFO of a machine shop. I quickly learned that it takes a lot of skill and organization to keep up a clean set of books. There are procedures to do daily, weekly and monthly.
Our firm can help guide you to keeping a cleaner set of books. We can offer suggestions that are specific to your needs, as each company has their own reporting requirements. Bookkeeping should not be taken lightly. In fact, I believe it is the most underappreciated function in a business. Bookkeeping doesn’t make a company profit directly as with sales, but in keeping historical financial information accurately, management can assess their business decisions to see those decisions effects on the bottom line and make adjustments accordingly.