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"The word accounting comes from accountability, if you’re going to be rich, you must be accountable for your money"- Robert Kiyosaki
All businesses of any scale require accounting. Accounting is the language of business that develops transparency for the everyday transaction and a properly working system. Every business proprietor must be concerned about his account books. Even if you hire a professional for your business accounting, you must know how accountancy works in order to understand the books that your accountant is creating for you. Accountancy is the process through which the net profit or loss of the organization is determined. It also helps you point out the transactional errors that are causing you to lose money or business. Accountancy is highly proportionate to your financial management. A lot of companies fail in the long run if their books lack clarity or information.
Several business owners restrain themselves from accounting due to incomplete knowledge. Many of them stay away from it just because it includes working with numbers. Accounting is the factor of a business that can never be ignored.
A set of rules used for the documentation of everyday transaction is known as accounting. Accounting gives the analysis of the working conditions of an organization and helps you measure the future opportunities or downfalls so that you can take considerable actions.
Managing your own business accounts can be a tough job if you’re bad with numbers, but at least knowing the skills will help you with the proper rules to begin your bookkeeping.
Economic Entity Assumption
The first thing that you must take care of before beginning to cross-check your books is the economic entity assumption.
Economic entity assumption is a mandatory concept used in business. It requires the business proprietor to separate the data from their business transactions and personal finances. This is legally required by the business standards and must not be ignored. This concept ensures that there is no interface amidst the operations of the business firm and the personal finances of its proprietor. As it would give the proprietor a chance to show expenses and losses that were personal and the law doesn’t allow it due to taxation.
Another factor that economic entity assumption points to is that the bank accounts of the owner and that of the business must be separated into two different accounts. This will keep the personal and business transactions discernible to the accountant. Depending on your business structure, economic entity assumption will be enforced upon you by law if you have a limited liability company. This is to make sure that the transactional data on the ledgers are being created solely by the business which is seen as a separate entity from the proprietor.
Order and organization are what keep the world from spinning into chaos. So one of the essential skills that you must have is organization in your firm. A business makes a tonne of transactions throughout a business accounting cycle, and as a proprietor, you are responsible for being in knowledge of all of them with an eye to discern one transaction from another. There are principles to organization that help you make sure you are in close sync with your transactional info.
The first principle that you must accept to be organized is to avoid cash transactions as much as you can. Cash transactions leave behind very little or no information about the transaction that is required to document the transaction in your books. Business accounting requires categorizing transactions in the books, but the payments made in cash without proper proof or description of the transaction makes it difficult. If you’re gonna have to make immediate transactions, its better you stick to credit or debit cards, bank transfers and checks. This way, you won’t have to rely on your memory or a useless little receipt to define what the transaction was about. You can easily record your transactions from the bank statements you will receive.
The second principle that you must not forget about is to have a timely record of your transactions. Whenever a transaction occurs in your business, make it a habit to record that transaction at the very moment, and on the same day, you must enter the details of the transaction into the proper books of your business. If you’re bringing out the books from 6 months earlier to analyze the current position of your business, the decisions you make would also be bygone. Making perfect decisions for your business requires the transactional data to be regularly updated in your books and the most recent data must be used, which is not more than a month old.
If you want to do your business accounting yourself, bookkeeping is a must. Even a basic idea of bookkeeping is necessary in order to record and store transactions in an orderly manner. Bookkeeping is the process in which all transactional data is documented, categorized and recorded in books for separate transactions.
Every business requires bookkeeping to help it know what the problem is if an issue occurs. It is important that you always record every transaction into proper bookkeeping records so that when the time comes, you have not lost small but crucial data by ignoring bookkeeping.
Bookkeeping begins with the collection of all the transactional documents like bills, receipts or bank statements. These documents then provide for all the initial data that is supposed to be recorded in proper books. The bookkeeping records are then supposed to be turned into analytical data which take the shape of financial statements like balance sheet, profit/loss statement, cash flow statement or income statement.
The basic principles of business accounting may be taken care of by you. Collection of data from every transaction and recording them into different books can be done easily by the business owner who is present during every transaction. But when it gets to the proper analytical statement creation, the technicalities of business accounting may not be easy to get a grasp of. If you wish to have a professional to have a look at your numbers, contact ATS Accounting for queries.
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Many small and midsize businesses get hassled from the time of tax filing season. Many times the business owners are troubled by the amount of taxes they have to pay, along with the expenses that were made for the development of the business and maintenance of machinery in the business. The general thought of any business owner is to save enough from the business transactions that allow them to have financial freedom even after filing the taxes. This is the reason why you should know about the tax deductions that your business is liable to. There are many transactions and purchases that are not supposed to be listed in the tax filings. These expenses are done to run your business with all the machinery and manpower you need. So the business owners must take care that they note down every tax business deduction they can make by law to protect their capital for business operations and development. Such expenses are not considered in the tax reports of a firm. So what are the top business deductions that you can make from your tax filing?
1) Car and Truck Expenses
Almost all businesses have to get raw materials, goods or workers in and out of the workplace or factory. The cost applied in the use of vehicles and gas used for the business as a mode of transport can be deducted from the taxes you pay. Since vehicles used for the transit of raw material or delivery of goods to customers are taken as capital invested in business operations. If you bought a vehicle in a financial year, a percentage of the cost of the vehicle is deducted from the taxes. The amount of gasoline used in the vehicles used by a business can also be deducted from the taxable amount. Apart from this, even if a firm lease a vehicle for certain tasks and deliveries at hand, the cost of transportation can be taken out of the business deductions.
2) Salaries and Wages
When you’re running a business that requires the use of manpower. The salaries and wages that you pay to the employees are not supposed to note in the tax filings. All the payments made to your employees like salaries, incentives, bonuses, commissions and retirement funds can be deducted from the tax. Although the payments that you make to the sole proprietors and business partners are not under the business expenses bracket so you cannot be in your business deductions account.
3) Contractual Labour
Many businesses use freelancers and contractual labour to get some of their work done. The salaries or wages that you pay to the labourers or workers. There has to be some paperwork from the contractor that shows proof of you hiring labour on a contractual basis.
4) Workplace Supplies
The supplies used in operating business every day is a deductible cost. Cleaning supplies, toilet supplies, postage stamps, office stationery, vacuum-cleaning cost, etc. are all deductible from taxes.
This is the most important business deduction from the taxes you pay. Depreciation is an amount deducted from the accounts of machinery, property and other such assets that depreciate in value with time. A piece of machinery in a small factory, for example, is used every day and the parts of the machine go through wear and tear. So when the machine is sold out to attain capital for new machinery, the cost for the machinery won’t be the same as it was bought for. So the depreciation in value of assets and business property can be deducted from taxes as they are business expenses.
6) Rent on Business Property
If your small business uses a place on rent for everyday operations, the rent on the property can be fully deducted from your taxes. Many businesses like boutiques, salons, spas, etc. use the rental property. The yearly rent on the property is paid out of the profit which makes it a business deduction.
The everyday operational activities of a small business or a midsize business require utilities that are charged for by the authorities. Electricity, for example, is fully deductible in the taxes. Another business deduction that can be deducted from the taxes is mobile phone bills used by you or you or your staff for the business. If you have a landline for domestic use you cannot deduct the bill from the tax but in the case of a second line for business use, it can be deducted as business expenses.
8) Other Taxes
Other taxes, like personal taxes that are not income tax or small business taxes, can be deducted from the tax filing list. Licensing and regulatory fees along with taxes on a property in the name of the business are tax-deductible. Your employer taxes and state unemployment taxes are deductible from taxation. Self-employed business owners, however, cannot benefit from tax deduction from half of their self-employment tax. It is a gross deduction on your income tax returns.
Insurances are another important business deduction that you can make from your taxes and save significant amounts from your taxes. All kinds of business insurances like, malpractice coverage, flood insurance, cyber liability insurance, business continuation insurance, and the owners' insurance cover is counted under business deductions. A small business may also claim a deduction of 50% of the health coverages for employees if you provide one.
Common repair jobs in the office building or manufacturing plants are deductible from taxes. Although the depreciation value of the machinery and other assets are accounted for in the business deductions, urgent repairs that might sometimes become fatal accidents can be deducted.
Business owners or staff might require time to time travelling for a meeting with clients or for checking a machinery unit that they have sold. If you or your staff travel out of the state for business, transportation, flight expenses and accommodation are fully deductible from taxes. Although the local commute is non-deductible.
Understanding the rules of tax accounting can be a tough knot, at ATS Accounting we take care of all your tax filing paperwork and tax deduction accounting.
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We all love the numbers that get added to our bank accounts every month or every week. If not the numbers, we love the payroll cheques that we receive regularly. As a worker, the payroll matters a lot. But what happens if you can't pay your employees well or there are some issues with your payroll system? Your employees may end up feeling negative in several ways. They may also be demotivated to work. To avoid these issues, you must ensure that you don't make any mistakes when it comes to your payroll system. Make your payroll system a perfect one by avoiding the following mistakes.
The inconsistencies can be anything, right from improper salary payouts to managing garnishment requirements. Whether your company is new or well established, it’s important to be consistent with your payment schedule. The most common schedules are either weekly or biweekly, but some companies choose to pay their employees semi-monthly or monthly. Based on whatever your organization's policies are, make sure you pay your employees on time, every month. Don't let people ask you or the finance department several times to follow up on their money. If you fail to do this, be ready to face the bitter behaviour and attitude of your employees. And you won't be able to blame then for anything then.
Not Staying Current
Sometimes, the issue may not be with your internal payroll system. You need to stay in line with the latest laws, rules, and regulations around payroll system in your area to ensure that you don't end up in any problems. Payroll laws and regulations are an ever-changing landscape. It’s important to be aware of new laws that are passed to ensure your company is maintaining compliance. When you miss a new law, you stand to lose invaluable time trying to amend any payments you have made using the previous law or rule. You can ensure compliance by creating a calendar that reminds you to check for updates to all relevant laws. And of course, if your employees find this out, they'll be upset with you and may even sue you for the same.
If your employees are working extra for you, make sure you acknowledge them. That's where the overtime incentives come into the picture. Specific guidelines must be followed when determining overtime pay and miscalculations can be costly. Employee litigation has been a rising trend in recent years where employees have claimed to be misclassified and treated as "exempt" employees and therefore not entitled to overtime. When tracking work hours through our time and attendance platform all hours (including overtime) are recorded and collected on organized time sheets that make calculating hours simple. And with this also, respect your payroll system's calendar. Pay your employees for the overtime in the current month at the end of this month and not after a quadrant. Skipping
When your employees work for you, they are eligible for various benefits and incentives. These benefits vary from organization to organization. However, some basic offers are established by the government that every organization and employer needs to respect. If your employees work better than they are expected to, you have to reward them rightly. And when you do, you need to maintain the right records so that the books of accounts look properly managed.
This is one of the biggest mistakes. Confusing two or more names and paying those people inappropriately is nothing but a blunder. This may happen even more when you have two or more people will have the same or similar names. Moreover, if you recently appointed a new person to look after the payroll system, there are higher chances that they may end up making this mistake. No matter what the scenario is, this mistake should be avoided. When a person is paid incorrectly, it sends out a wrong impression to your employees that your payroll system isn't efficient that you end up making such silly yet massive mistakes. Therefore, be very careful with what you do. When you maintain accurate records, this mistake will likely not happen.
Another way to avoid any errors in your payroll system is by outsourcing the job to a reputed company. A company like ATS Accounting can help you manage your work while we take away the hectic tasks of payroll calculation, incentive and other benefits addition, and salary payment. So give us a call today to find out how we can take away your worries.
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It is 2019, and not everyone is made for the 9 to 5 life today. People seeking to do their minds are everywhere and entrepreneurship seems promising for a life that doesn’t need a boss. Starting up your own business as a source of income is what many of us seek, but things go sideways for some. Reasons could be someone being treacherous or employees not liking the form of your work. A lot of times, the reason is just incomplete for the expenses you make for the business to run smoothly. Sometimes, in putting a business on the tracks and making it run, the capital input of the company dries in the first few years of initiation. This is the result of lack of experience for many young entrepreneurs.
When starting a business, the basic flow of thought of any beginner is towards the work that they will be doing in their business facility. For the financial management of the business, the easiest option would be to outsource your accounting through business services. But, there are some aspects of running a business in which the expenses go unnoticed and the business ends up having more expenditure than its profit. Hidden costs that can mess with the growth of your businesses must be on something you can’t turn a blind eye from.
Licenses and Permits
The days of barter are gone, and everything you earn has a share for the government as taxes. So eventually, the government needs to be informed before you set your foot in the market. Every new business needs permissions from the government and the local business community. Licenses for sale of objects and functioning hours are required for you to legally be on the track. Licensing and permits are seldom one time fees and require renewals as per the nature of your business. Always set aside some money for the renewals. You can join the local business networking organizations for benefits in the market and update of events and dates. Or you can hire a business service for consultation on starting a business.
Facility and Utilities
Running a business comes along with the requirement for a space to formalize your ideas into working for your profit. A start-up with just the founders or partners might not need anything more than a home office if its an online business. But as the nature of the business changes, having a professional space for working away from daily life becomes an obligation. Also, the utilities of such a facility that houses your work staff and other electronic gadgets, like computers, can run heavy on your pockets while they go unnoticed. Before you rent an office space, ask yourself what kind of facility is required for the nature of your business and see if a temporary office space works? Hiring a bookkeeper from business services for the proper calculation of your expenses can save you time and money.
Maintenance of Equipment and Upgrades
Even a small retail shop on the street corner requires equipment for functioning. At the beginning of a business, most entrepreneurs are into the development of their product or services and focus on the apparatus involved in the production and sale. In the enthusiasm of production and management of supplies, the smaller factors of the business, like the office equipment (computers, fax machines, copiers, etc.) and maintenance of the facility, are neglected. Sometimes, even the opportune equipment up-gradation in your workspace can save you future financial troubles on their maintenance. You can buy second-hand products and office equipment like desks and chairs on websites like eBay. However, you should never neglect the computers and laptops in your office and keep upgrading them according to the changing tech in the market.
Employees and Payrolls
Taking care of the people that create the wheels of your business and do their best to keep it rolling must be the most important point of focus. Proper budgeting of the employees who work under you is necessary to keep the running costs under control. The salaries, leaves, health insurance and training costs add up to external expenses. For the proper management of the compensation your employees get, you can hire a business service for payroll management. If you fail to provide the proper work environment, satisfactory salaries or wages and added benefits, you will most likely lose some good workers. Replacing an employee costs a part of the previous worker’s salary and might even require giving away more compensation to the replacement. Provide perks in your office space like refreshments for zoned out staff or allowing casual dressing with flexible timings.
Inventory loss or shrinkage is the loss of goods of sale to things like theft, damage, burglaries or faulty products. Shrinkage costs losses up to CA$ 4 billion every year to an average of Canadian retailers. Shrinkage costs add up over time and come up as a heavy loss on your hand. Inventory loss can be caused by both customer and employee theft. Prevention of shoplifting by employing security measures can decrease the amount of shrinkage. Insuring your warehouses from accidental damage will help you cope with the loss if the goods were lost to an accident like fire. Give allowances to employees to shop at the workplace for leaner rates. It will induce a sense of ownership and prevent internal thefts in your facility.
Running a successful business requires money and most of all, it eats up all of your time. Time is the most important resource for all of us. Tasks that are time-consuming and non-productive at the same time, are going to be an opportunity-killer for you. Tasks like bookkeeping can be outsourced to hired specialists from companies with business services. While the work is on someone else’s timeline, you can use the time to find opportunities for expansion or maintain a work-life balance to keep your happy juices flowing.
Starting a business is not a mammoth task but ensuring its success is. Not having complete information about the obligatory procedures and the risks involved in the earlier stages can lead to the business failing miserably in the market. If you’re someone setting off on a journey of business and entrepreneurship, hire a start-up consultant from a company providing business services in Alberta.
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Your business's accounting system is based on the bookkeeping process established to manage your company's funds. Bookkeeping records the financial transactions that are carried out during the course of business. When your business finances are in order, it becomes simpler to equip strategies that would bring success to your business. Here are a few strategies that would assist your business to achieve perpetual success.
Maintain Separate Business and Personal Finances
When running a business, it is important to engage organization funds for business use only. Using them for personal purposes not only affects the quantity in your business fund but also can invite legal complications. It could be a reason to pierce through the corporate veil and harm your business finances. Small businesses are managed by limited people, which makes it easier to cause a default whilst accessing the finances for the business. You should make it a point to open separate accounts each for personal and business finances. Using distinct bank accounts and credit cards for your business will not only help during tax filing processes but will also help you distinguish between the nature of your finances, thus uncomplicating the task of bookkeeping.
Hold Internal Control in Place
Having internal control over the company’s bookkeeping procedures and policies can expand your control over various finances and outtakes occurring in the business. When a transaction takes place, it is better to have an employee take down the transaction while another collects the fee. A third person can authorize the dealing. This measure of dividing work amongst the employees would keep more than one person in the loop and maintain accuracy while inputting data.
Plan Your Taxes Through the Year
Keeping in touch with your tax filing dates and requirements will not only save you time but also help you organize your expenses. You can plan the tax filing amounts and strategies well in advance to implement and pay smartly to avoid any costly penalties or burdens.
Follow a Specified Accounting Method
The standard accounting systems comprise of two accounting methods to be used in your business: cash basis accounting and accrual accounting. In the former method, cash is recorded when it is received by the business. This method is usually recommended to be used in businesses that strictly require making cash payments. In the accrual method of accounting, the matching principle of accounts is implemented, where the revenues and expenses are recorded as they occur. This method could be complicated because of the various rules it requires to be followed. Nonetheless, accrual accounting is your best choice while you opt for invoicing to clients. Your bookkeeping strategy should be built with an appropriate method that suits your business.
Track Expenses with Accounting Software
Recording expenses on a timely basis can be effective in many ways. From assisting in tax filing to helping in maintaining the books, a thorough record of the business finances is promising. Different accounting software are available to be used for tracking expenses and managing your accounts. Planning your expenses well in advance and building categories for them will ease the bookkeeping process. Choose to use an accounting software system that will not only help you with your current bookkeeping requirements but extend to a larger scope of work needs.
Focus on Tracking Performance Rather Than Plans
The best bookkeeping strategy to put in place is tracking the performance rather than plans built for the business. Most businesses chart plans or projects to undertake, which are then used to track the company's ongoing progress. When a plan is put in place, the financial budget of the business would be tracked and manufactured accordingly. On the other hand, if more focus is engaged in tracking the overall progress, it gives you a wider scope to compare financial figures compared to previous numbers and conclude strategically. Evaluating financial data monthly assists in building bookkeeping strategies for better results. For example, if growth in a company's finance margin over a period is visible due to a particular product, decisions of investing more into it can increase the annual cash flow.
Access Real-Time Data
Immediate access to the financial data of your business gives a larger scope to planning your company's finances. Your business may require you to deal with various critical information of outstanding account receivables or payables. With access to real-time data, it would be easier to develop strategic decisions and evaluate the current status of the business.
Follow Up on Bank Statements
Your bank statements are a compilation of the balances in your account and information on the complete stack of transactions. Conducting regular follow-ups makes it easier to review business proceedings thoroughly. Ideally, you can compare the information you’ve put in your company's books with the bank statement. This ensures a check over the presence of any discrepancies or any unauthorized transaction that may have taken place during the course of business.
Structure Accounts in Order
Structuring accounts according to categories eases the bookkeeping process. Well-categorized accounts would also make it easier to go back to them in the future if the need arises. The business’s receipts, records and any other information important for the bookkeeping process should be maintained in an orderly manner to suffice any requirements. This ensures efficient bookkeeping and aid in picking out any discrepancies.
The basic strategy your company should follow to is avoiding making bookkeeping mistakes to accomplish continuous success. Having said that, the above-mentioned strategies when implemented with prior consultation can help you achieve greater results. While you consult professional accountants, make sure to give them a true and fair view of your company to achieve the best results.
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Accounting and bookkeeping are practices that can be tedious. These functions although increase the efficiency of a company and add to the economic process of the nation. The practice of outsourcing accountants’ service has been in the system for a long time. Outsourcing is the practice of having a certain job function handled outside the company. It is just one means to cut costs and help the daily work of business processing. Managing the accounting processes for a company includes various functions such as updating transactions and maintaining the essential accounts daily. You may wonder if it's the right choice to outsource your bookkeeping services. But rest assured, it is beneficial to outsource the accounting and bookkeeping of your company, and here’s why.
Ease of Availability
Hiring a full-time or part-time accountant may not be an easy task. Accounting and bookkeeping are processes that require to be recorded daily to maintain the right set of accounts. An in-house person may not be available at all times which can stun the ongoing process. Outsourcing an accountant, on the other hand, would be quicker and efficient. There is a guarantee of them being available for 365 days of the year and around the clock. With their expertise and well-equipped team, it would be comparatively easier for them to complete tasks and submit the data and the required accounts and reports on time. In contrast to which, it may be cumbersome to contain the in-house employees and extract necessary accounts on a timely basis. Also, being an employee of the company, the in-house accountant would be entitled to holidays and off-days from the company.
Access to the Latest Tools
Today, accounting is best done when you have access to the best accounting software and tools like QuickBooks. As a small business, getting the paid version of this software can be expensive. Plus, finding people who can efficiently work with these tools can be difficult and time-consuming. Professional accountants are equipped with advanced accounting software to cater to the companies requirement of personalized reports. It would take time for the business to make important financial decisions. It is also easier to obtain any information related to accounting and payroll which the professional accountants would have knowledge of. Outsourcing to the right accountant will not only provide you with expert staff but you will also get access to the latest accounting tools.
Reduced Employee Cost
Outsourcing your accounts to a professional accounting team will reduce your cost dramatically, and allow you to concentrate the limited resources on your core business. You would have to invest zero employee cost on the accountant. With the benefit of paying only their fees, your company would not have to worry about expenses like paid leaves, insurance, payroll taxes, incentives, bonuses, and other employee benefits. You can eliminate overhead costs connected to the services you receive, and thereby deploy the resources at the area where you require to maximize its leverage.
Focus on Your Core Business
Most businesses don’t have accounting as their core competence. The growth of a business relies on the increase of the sales and service of the company which ultimately would lead to profits. Putting away focus from administrative tasks like accounting and bookkeeping gives you ample time and resources to spend on your core business. A professional outsourced accountant would be able to handle the accounts at the back-end while you work at running your company. It would make it simpler for you to focus on your clients and core processes for the business while they manage the accounting of your company. Spending more time and energy with clients and customers with a high level of service would bring them satisfaction.
Minimized Office Cost
An outsourced accountant would work with his team away from your office. This makes you liable to only pay the fees for the work they deliver to you. When you hire an accountant on your in-house team of technicians or any other business, it would be mandatory for the company to at least provide a decent working space for them. This would affect your company’s opportunity cost of hiring a team member to cater to your core business. Apart from the accumulation of the opportunity cost, it would also save you the extra office expenses that may incur during the in-house accountants work period in the office.
Accounting errors in the payroll or income tax filing can lead to interest charges or penalties which are staggering mistakes for a company’s future. When you hire professional accountants to manage your accounts or take care of these expenses, it reduces the risks that the company would’ve otherwise have to face. It’s not just access to expert advice but also the guarantee that a professional would meet the compliance and regulatory standards in confidence of the financial reports. Outsourced accountants specialize in their work and which make them even dependable for qualified work. These professionals would have reliable information to help make business decisions of improved nature in less time. Outsourcing the accounting work to the perfect resource would give you peace of mind and put you at the advantage of being in pace with today’s hyper-competitive environment.
You can use different cloud-based accounting applications, use similar software as the bookkeeper and share the necessary financial documents with your accountant to integrate outsourced bookkeeping with your existing accounting department. For this, let Canada’s leading accounting firm provides you with its service.Use accounting services that we offer for entrepreneurs, small and medium size business owners.
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Running your business is a remarkable journey on its own. Looking after various functions, especially the accounting practices is as interesting as tricky it is. You need to look for different ways to make sure that the valuable numbers of your business don't work against you. And in this process, when you follow the same pattern in accounting, the process starts to stagnant. Thus, you must consider the following accounting diversification tips to ensure that your business moves ahead with a balance of fresh and traditional ideas.
Start From Your Employees
Your business's success starts with your employees. So make sure you have employees who can contribute to accounting diversification. If you don't have enough people in your office, hire new ones. Intentionally seek people with different points of view. Invite people who are collaborative and are not afraid to express their ideas. Their contribution may lead to new streams of revenue that are aligned with your current services. Once you have a good crowd with varied mindsets and ideas, encourage them to brainstorm and think of diversification ideas. As you manage your business, reward team members who think outside the box and offer new perspectives. Acknowledge fresh ideas so that they can continue contributing to the process. Make a list of all these ideas and contemplate. See which ideas can be workable, and start taking actionable steps in those directions.
Use Different Accounting Methods
When it comes to accounting diversification, one thing that you can easily do is diversify the way you account. Today, several options are available for small businesses to opt to complete their daily accounting practices. Rather than choosing just one type and sticking to it, you can try your hand at different alternatives. Firstly, opt for the traditional way of accounting of using Microsoft Excel or Google Sheets. You can manually enter the less confusing parts of the accounting system, such as the payroll and bonuses if you have a small group. For other more tedious tasks like tax calculation and filing, you can use the best accounting software available. Most of these accounting software require you to pay in order to use the complete services. With accounting diversification of accounting methods, you save a lot of money by doing accounting in traditional ways.
Make Different Teams
Rather than appointing one person to look after your organization's accounting practices, you must make different teams or small departments. Let each of these teams handle one accounting process. Different teams can handle tax planning, regular bookkeeping, payroll management, and other processes. When different people are appointed to do a specific task, they tend to focus more on that area. This not only helps in getting innovative ideas of running those processes efficiently but also helps you to know who to talk to for a specific topic. For instance, if you want to know about tax filing and deductions, you can directly get in touch with the tax department. This way, people will be able to work with more freedom and creativity, which will further benefit your organization. Also, diverse teams resolve challenges at a quicker rate than homogenous teams. But keep in mind that creating different avenues will cost you extra as you will have to hire more people.
Hire an Accountant
Although it is an added expense in your overall business budget, the expense will be worth it. Just like when a company needs legal help, the only option is a lawyer, an accountant can guide the company for accounting diversification. This professional will be your assistance at every point and help you with several more ways of accounting diversification. The professional knows how a business should ideally function and what are the best-proven ways to diversify not only accounting but all other business processes so that you can run your business efficiently and within the budget, you outline.
Accounting diversification is a lot more than just a simple idea. It is a master plan that can take your business on the path of success and efficiency. Follow these easy tips and try to cut down on extra costs, and you'll continue being successful. Keep in touch with your accountant so that they can help you at every point in your journey.
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Many entrepreneurs use Excel spreadsheets to track and record their finances. Due to the extensive features of Excel spreadsheet, it becomes more manageable to account your funds. Many accounting services providing firms also use this application, making it a default for accounting. However, even the best of the things can end with errors unless you know how to use Excel spreadsheets well. We have listed down a few Excel spreadsheet mistakes you should avoid while accounting.
1) Formatting Errors
Do you know the small window that pops up on your screen after you click Save As, which says ‘Too many different cell formats’ that leaves you no option of keeping your work? Yes, it can give you a panic attack. Besides not being able to save your work, Excel can itself change the formatting of your cells and create confusion. When the Excel spreadsheet software is unable to recognize the format, it pops up a small window saying ‘Excel found unreadable content in the file’.
Additionally, do not try to copy-paste data as doing so increases the size of the file. Even though you have the copied data on your clipboard, sometimes the software will pop up another window that says ‘Microsoft Excel can’t paste data’. To avoid all the pop-up windows from interfering your accounting, try to keep your formatting options to a minimum. It is better to limit your formatting rather than lose all of your accounting work.
2) Data Entry Errors
Using incorrect characters or missing a few ones is a human error. False characters is an error for which you cannot sue someone because it could have happened by you. You probably used a minus instead of plus or decimal points in the wrong places. It does not seem like a big deal, but you could end up losing a significant amount of money. In 1995, Fidelity’s Magellan fund had a loss of $1.3 billion, because instead of using a minus, their accountant had used a plus. The whole scene created confusion and doubled the entire money that made them wonder how there was an unknown gain. There is no real solution here except for hardcore reviewing, but you could leave the job in the hands of accounting services.
These errors are similar to character errors, except the numbering becomes a mistake. About ninety percent of accounting is all about numbers, and if you mess up the numbers, you indirectly mess up ninety percent of accounting. Many businesses have ended up in losses due to this kind of error. For the most part, you can review carefully or hire accounting services.
3) Incorrect Formula Range
You input your IFs, Index+Match and Structured References after writing a long and complex formula, but then Excel ends up denying it and shows different errors. Formula errors are #value, ####, #n/a, #name, and #ref. Yes, Excel does love the hashtag trend but you must be tired of it by now. There are a few ways to fix formula errors and get rid of these #errors. An incorrect formula range can sometimes not even show due to whatsoever technical reasons, and this again requires careful reviewing. There was a time when two Harvard professors made this error of inputting a wrong formula range. The hilarious part of the story is that their student working on the assignment thought they made a mistake because two well-known Harvard professors could never make such an error. The example is given only to assure you that anybody is capable of making such mistakes, but you can try to avoid these by knowing before-hand.
4) Lack of Review and Skills
Studies reveal that even when you review your spreadsheet yourself, there is a high possibility that your spreadsheet contains a large magnitude of errors. Take this sentence and remember it every time you complete accounting work, and so that you can review carefully. Allow other people involved to review your spreadsheet. A third party will be more likely to point out mistakes quickly. Besides, not all errors are distinct, and there is no certainty to what extent each error can affect your accounting.
Usually, in your company when you have training taking place for recruits, you overlook the need for spreadsheet training. Not just you, but everyone assumes that Excel is a software that any person would be able to figure it out themselves and get the hang of eventually. You must educate them on the methods and techniques required to operate Excel spreadsheets. With this, you can avoid not only your errors but also possible errors from your employees working on the task. Although, once you appoint any accounting services having the right knowledge, there will be one less thing to worry about in your daily schedule. Besides, there are other ways in which accounting services can benefit your business.
5) Lack of Professional Help
Accounting is a full-time job, and unless you have mastered in accountancy you should avoid trying it yourself. Reading up articles on the internet might not be enough to account the finances of your business. Accountants have ample knowledge, the required software skills, and the skills to fix potential errors as well. Therefore, if you are new to the world of business accounting, consider hiring accounting services rather than experimenting on your own and facing losses.
Now that you know the possible mistakes to avoid, you can keep this in mind and track your accounts without worries using Excel spreadsheets. Moreover, you can always contact reputed accounting services to help you with your finances.