Check writing is one of the easiest to manage, and one of the most critical since it often has the greatest room for error and, potentially, fraud. We recommend that our clients keep close control over their check books with strict rules and protocols about payables and receivables.
Starting out with a common set of protocols makes the accounting process efficient and manageable for all concerned.
In developing the procedures that make policies a reality, remember that procedures, like systems, need to be well-documented in order to be transferrable, and adaptable.
When it comes time to do that annual or quarterly performance review, you need to apply a set of achievable metrics that truly gauge employee performance.
To use even more advanced accounting KPIs, assess relationship numbers or those variables that are interdependent on other operations within the organization. Relationship numbers include number of sales in the pipeline, billable efficiency, gross margin, and net margin.
The balance sheet is typically used to calculate the net worth of the business, and includes liabilities, cash, and equipment. A basic tenet of double-entry bookkeeping is that the total assets (what the company owns) should equal the liabilities plus equity, i.e. the books should balance. Subtracting the liabilities form the assets reveals the net worth of the business.
Understanding the types and hierarchy of the line items in your chart of accounts will make it easier to maintain clean books, and use your accounting software properly. The chart of accounts categories fall under a few basic groups: income and expense, assets, liabilities and equity accounts.
CPAs come with different specialties and can provide expert advice on a wide range of topics. There are different ways to identify a CPA who is right for your organization:
Starting with clean books and financial statements will not only streamline tax filing but also lower tax preparation costs, and give senior management a clearer understanding of the company’s tax position
Smart business owners need to be sure their accounting departments are sufficiently familiar with changes in tax law, or they need to seek help from accounting services that are paid to keep up with regulatory changes.
Many small businesses are structured as S corporations of LLCs, which means the owner’s personal taxes are intimately tied to their businesses. The flow-through income from the business has to be reported on the owner’s tax returns.
In addition to checking the data accuracy and closing the books, you should think about and plan for the up-coming year. Be sure your tax objective is aligned with your business goals.