Maybe you are a small business with only one office that has to perform several office functions, without the luxury or a separate accounting office. Maybe you are a freelance accountant, working out of a home office. Perhaps you are just getting into accounting professionally and aren’t sure of the processes. In all of these examples, and more, it’s important to keep your procedure consistent and your office organized. Today’s blog is designed to outline some best practices for any office where accounting is conducted, regardless of where that office may be.
Ledger is King:
This is your foundation of all accounting. The ledger is the peanut butter in your sandwich, the rings on your binder, the ink in your pen. Every company has a general ledger, for the income and the expenses, and it’s vital that this is kept current and organized. Your ledger should list every last one of your accounts, and the status of that account. In a business context, this is often not separate bank accounts we are referring to, (although if you have multiple of those, obviously include them as well) rather the separate classes of finance that your company has in spending and earning. Assets, liabilities, equity, revenue streams, and expenses. Keep your ledger clean. Update it constantly to keep it current. Have a safe keeping spot that your ledger stays in, always, when not in use.
Digital and Hard Copy:
Hard copy of paperwork can be difficult in a confined or limited space. While many prefer hard copies in case of digital error, this may not be possible in your office. If you do have the space to retain hard copies of paperwork, make sure that they are separate, organized, and well-labeled. I recommend making digital copies of your paperwork even if you do have the space for hard copies, as technology makes it easy to have a streamlined system, helps you retrieve info faster, and keeps your books safe even if they are lost, stolen, or damaged. If you need to do work from multiple locations, keeping accounting information secure in the cloud means it can be accessed from any device anywhere.
Perform Self-Audits:
At the end of each quarter, it is smart to perform an audit on your finances. It’s also known as “closing the books”, and ensures that each quarter’s finances are aligned. If you wait too long, mistakes or oversights can go unchecked, and be difficult to track down or fix. It also keeps your finances up to date. If you lose a little here and a little there due to inaccuracy, inattentiveness, or mistakes, that can add up to a large end-of-year deficit that surprises you.
Do Your Software Research:
If you use software, chances are you do not use it to it’s full functionality. If you don’t use it, you need to weigh the pros and cons of switching over. It can streamline and organize your accounting, it can cut the time spent on the ledger and in self-audits in half, maybe more.
Hire an External Auditor:
Even if not legally required to have an outside auditor come in, it is a good practice every year or so to have someone from outside the company take a look at your books. It ensures you aren’t missing anything, it increases the chances of catching theft or fraud with your staff or customers, and can help you correct mistakes.
