Research Has Shown Poor Financial Record Keeping To Be One Of The Major Causes Of Business Failure. Without Proper Accounting Records, It Will Be Impossible To Know How Much Money Your Business Is Making, How Much You're Spending, Whether Your Business Is Running At A Profit, Or At A Loss.

Flawed Financial Records Could Also Lead To Problems With The Tax Authorities, And May Result In Your Business Losing Money To Fines For Late Returns Filing And Other Tax Penalties.

A Company Operating With Disorganized, Inaccurate Or Not-Up-To-Date Financial Records Is "Flying Blind" - Sooner Or Later, It Will CRASH!

On this thread, Will Show You Some Simple, But Highly-Effective Steps You Can Take To Clean-Up Your Company's Accounting Mess. Stay Tuned!

Before I proceed, is anyone following?

It's a very long post, approximately 2,000 words. Hence, I'll be posting it in 2 or 3 parts, starting tomorrow.

But If you can't wait, click HERE to read the full article.

All business owners start-out with good intentions for their businesses, but as time goes by, other business activities consume all their time leaving little to no time for bookkeeping.

However, for any business to maintain a healthy financial status, it is crucial to pay proper attention to the business’ bookkeeping in order to avoid cash flow issues or issues related to taxes.

In this article, we are going to look at how you can fix your company’s accounting mess and get your company’s financial records in the right track.

First of all, you might be wondering how you got into such a mess with your business’ bookkeeping. Below, we are going to look at some of the reasons why businesses find themselves in an accounting mess.

Why Many Organizations Find Themselves in an Accounting Mess

1. Procrastination

Due to the very busy schedule of business owners, there are often other important things that need to be urgently attended to, in the course of handling these other business activities, bookkeeping is usually pushed to the end of their to-do list or they are completely ignored.

While this may not seem like a serious problem at the moment, when you leave your business’ bookkeeping unattended to, it compounds over time and leads to serious financial crisis in the future.

2. Hastily Taking Record

Some business owners have understood that procrastinating about their bookkeeping is not healthy for their business, so they try as much as possible to do their bookkeeping at the end of the day no matter how little the time they have left is.

It is a good thing that they paid attention to such an important aspect of their business. But the problem is, because they are doing it with very little amount of time, they end up doing it hastily and eventually enter wrong records which create a lot of confusion at the end of the day and even lead to frustration.

3. Disorganization

Business owners who are disorganized often end up with an accounting mess, this is due to the fact that they tend to mix things up, including their business and personal finances together.

Business owners while going on their personal shopping might pick up supplies for their business and often times such expenses go unrecorded.

Failure to keep receipts for business expenditures, making business related expenses from non business accounts or not taking record of petty cash expenses – which is usually omitted with the excuse that it’s insignificant – could lead to an accounting mess.

4. Doing It Yourself

Most small business owners try to handle their business’ accounting themselves in order to save cost, even though they do not have the required expertise to do so.

As a business owner, while doing your accounting yourself, you could miss little errors that could have otherwise been spotted by an accounting professional. These little errors could put your company in serious accounting mess if it continues to accumulate over time and is not corrected.

Getting The Wrong Person To Handle It
Choosing just about anyone to handle your accounting can be very detrimental to the financial status of your company. An unprofessional accountant is not as invested in the financial well being of your business as much as you are.

If the person makes a mistake, you bear the loss or suffer the consequences, in addition to that, the person may also engage in theft of the company’s funds.

5. Miscommunication

An accounting mess can also occur when a business owner fails to maintain proper communication with their bookkeeper. It is important that you convey all financial transactions with your bookkeeper to ensure an accurate and up-to-date record of all financial transactions.

Business owners could forget that they gave cash discount or bonus to a customer. If such data are not written down and communicated to the bookkeeper, errors could arise and affect your company’s accounting.

Having pointed out reasons why many organizations find themselves in an accounting mess, let’s quickly take a look at why it’s important to fix your company’s accounting mess:

SOURCE: Accounting Wizards’ Blog

Importance Of Fixing Your Company’s Accounting Mess

Understanding the importance of fixing your company’s accounting mess could be the first step to actually fixing your company’s accounting problems. Below are some reasons why it’s important to fix your company’s accounting mess:

1. Tracking Receivables

Not being able to track your receivables could mean leaving a pile of money on the table. Without a way to detect outstanding invoices and get your money from clients who still owe your company, you run the risk of losing those money as time goes by.

Fixing your account in time helps you keep record of your cash flow, including profits, expenses and outstanding debts, so you don’t run the risk of losing your money.

2. Proper Management Of Expenses

Keeping accurate and up-to-date record of all business expenses – including petty cash purchases, recurring payments, hidden charges and interests – can help you identify where your expenses are going and know what is worth spending money on and what you shouldn’t be spending on.

On the other hand, failure to keep accurate record of all your expenses could lead to non corresponding values between the money you are supposed to have and how much is actually available.

3. Less Tax Payment

Fixing your accounts and keeping an accurate and up-to-date record that corresponds with your claims puts you in a better position to take advantage of available tax deductions that you are qualified to take and not paying more than you ought to at tax time.

On the other hand, inaccurate records can lead to underpaying your tax which will inevitably lead to penalties and other charges when discovered.

4. Saving Time

When you don’t maintain a constantly updated record of your accounts, you stand the risk of having to hurriedly fix your accounts each time you need it for a financial transaction.

This rush in trying to fix your account within a very short amount of time will only lead to errors or mistakes that you will still have to fix. Fixing these errors will take you more time than you would have spent, if you took a few minutes each day to attend to your bookkeeping.

Secondly, if you missed or failed to fix any of those errors, they will only lead to more serious problems in the future.

5. Reconciled Accounts

Fixing your account ensures that your business books synchronize with the real balance in your business accounts. An account can be said to be reconciled when its records in the books matches the company’s real account balance.

That’s a clear indication that the company’s financial transactions are properly documented and that the company’s financial health is in good condition.

Having said all of that, you now understand why it’s important to have your company’s accounting mess fixed. Now let’s get unto the business of the day, how to actually fix your company’s accounting mess.

SOURCE: Accounting Wizards’ Blog

How To Fix Your Company’s Accounting Mess

A decision to fix you’re your accounting mess is a wise decision towards ensuring that your company’s finances is in good condition. It may look like a complicated task when trying to fix a messed up account but do not worry, after reading this article you will realize that it’s not so difficult and you will know exactly where to start.

Even after fixing your company’s accounting mess, without proper knowledge on how to maintain a consistent accurate accounting, sooner or later, you will still find your company in another accounting mess.

Without wasting any more time, let’s take a look at how you can fix your company’s accounting mess once and for all.

1. Start Properly

To maintain a smooth and healthy bookkeeping for your company, you need to start properly and build it on the right foundation. Chances are your company is having an accounting mess right now because you did not start on the right foundation or maybe you started on the right foundation but along the line, you mixed things up and everything got messy.

The first thing you should do is stop and start all over from the beginning so you can lay the right foundation from the start. This will also help you get over the previous annoying bad record and have a fresh beginning.

2. Keep Expenses Receipt

It is easy to forget little expenses that were made if you do not have the receipts to remind you. This little expenses if not recorded can result to some serious accounting issues down the line.

Have you ever made an expense with your business account and forgot completely what the money was spent on? This problem could have been easily avoided if you had a receipt for every expense you made.

Not all purchases comes with a receipt, when that is the case, write down a little note stating that you’ve made a purchase, the date, the item purchased and how much was spent. That will serve as a reminder when doing your accounting.

3. Regular Reconciliations

After setting up everything correctly, the next thing you’ll have to do is to reconcile your accounts regularly to ensure that all records are correct and up-to-date. Small business owners must at least reconcile their accounts monthly, but as the business begins to grow and there is more cash flow into and out of the business, it might become necessary to reconcile the accounts weekly or on a daily basis.

Obviously this will require some level of discipline, so you will have to dedicate a few minutes or hours monthly, weekly or daily as the case may be to get this task done. Pushing aside this task and letting things pile up will only give rise to messed up account sooner or later.

4. Get an Accounting Software

You need an accounting software to effectively manage your company’s accounting. An accounting software can easily spot little math errors that you would have otherwise missed yourself.

An advantage of using a cloud based accounting software is that your data are stored in the cloud, should a disaster occurs, your transaction details are still kept safe.

A quick Google search for “Accounting software” will reveal hundreds of accounting software. Browse through them to find the one that perfectly suits your business or talk to a professional accountant to help you choose the one that’s best for your business.

5. Get Professional Help

A professional accountant is an expert in the field of accounting, they know exactly what they are doing, and they know the right solution to apply for your specific accounting problems.

As business owner, your best time isn’t spent on doing your company’s accounting yourself, rather you should let the experts handle this aspect of your business for you while you focus on your core competence – growing your business.

A professional accountant will give you expert advice on how to better handle your company’s finances, do your account reconciliation for you on a daily basis or as the case demands and help you get tax deductions that you qualify for.

In Conclusion…

Running a business is hectic enough, don’t add to that stress by handling your company’s bookkeeping yourself. Get a professional accountant to oversee the bookkeeping of your company while you focus your time on other important aspects of your business.

A professional accountant will not only help you look after your books and offer you a continuous professional bookkeeping service but you can also take advantage of their experience and expand the growth of your business.

You will begin to notice how consistently accurate your accounting management is, which will help you make better financial decisions for your company.

SOURCE: Accounting Wizards’ Blog

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