Accounting for Business

Keeping accurate track of where a company’s money is coming from and going to is an obvious necessity. An accurate budget is needed not only for determining budget and direction of projects and focus but also to be in compliance with tax laws and regulations pertaining to incorporations, sole proprietorships, and limited liability companies.

Smaller businesses and start-ups typically go with any one of the many good accounting software programs. Varying in complexity and detail, most of them do an adequate job of creating the required money trail to explain to taxing authorities or partners where the money comes from and goes.

I have often read in reviews of these software titles how they can even save you the expense of an accountant by completely automating that in your business and providing easy to print forms for quarterly and annual tax submissions. It sounds like a clear answer and cost effective solution for your book keeping.

While I agree it would be a difficult if not impossible task to control or keep tabs on your budget without the use of one of the available software titles for this purpose, it does not replace the need for an actual accountant or accountant firm’s services.

There are numerous reasons for this. All of them relate directly to the actual purpose of an accountant. Good accounting software will track credit cards, bank accounts, and bills of a company and at first glance will give an appearance of knowing the details of financials by looking at the reports and graphs. They are a great tool for day to day updates on finances. Your accountant or accountant firm will require you to use some form of this software.

Accountant software falls off in a key area. It all depends on you or your office manager correctly identifying and categorizing each entry. It also leaves a lot of room for interpretation. When presented with a pop-up box of options to select a category to place the income or expenditure it depends on a person selecting the right option – a person with no expertise in accounting usually.

Another large failure in most accounting programs is the attempt at automation. If you use it to write a check to a vendor and select a category it automatically tries to place all future checks to that company in the same category. As an example if you occasionally hire an IT office to work on your server and then 6 months later you purchase a new server from that same place it thinks it is all the same class of expenses, but capital investment into business and maintenance and upkeep are very different things.

The single most important reason for an actual accountant is when other people want to look at your financials. Taxing authorities are most obvious. Even tax software that guarantees correctness is of little use as the guarantee if read carefully is that they used the information put into them correctly. They give no guarantee to you or the government that the information was correct to begin with.

If you ever need a bank loan or a substantial line of credit opened a bank will also require an accountant audited set of financials- typically several years of them. No outside source is ever going to give a lot of credibility to any financial records that depend entirely on the company keeping the books (with ability to manipulate the same books) verifying the information as true.

An outside accountant firm such as Goringe Accountants protect you from tax problems, prepare your business to grow, and assist you in finding discrepancies from within your own office. Book keeping software supplements your accountant. It does not replace the need for one.