Advantages and disadvantages of making your own accounting

Introduction:

The issue of making own accounting became commonplace with the introduction of low cost software in the early 1990s. On September 27, 1994, Intuit purchased a program called MoneyCounts from Parsons Technology for $ 64 million. Intuit changed the name of MoneyCounts into QuickBooks and created a very successful Unique Seller Proposal "You Can Save Money by Making Your Own Accounting". That USP claimed in the Intuit to capture almost 85% of the small business market. Accountants were not fans of this very popular software for some very valid reasons. First, it was not true accounting with serious security breaches. Second, promoting inexperienced individuals was an important part of the financial system. Third, it was disturbing to the company's owners from their core business and the latter severely cut it into the auditing firm.

Addressing all issues related to DIY accounting in detail would require a book. I will take as many essentials here to give the reader the opportunity to better understand a very important topic. I welcome all questions and comments on content in an attempt to assist entrepreneurs who have not had the opportunity to make an informed decision.

Issues

If you read these special reports, you are one of the millions of small business owners who have difficulty publishing "creating their own books". In many cases, the idea of ​​keeping an external accountant or accountant to address your financial financial issues, such as opening your closet to foreigners in full. I believe this privacy is valid. To be completely honest, one of the reasons I decided to become a CPA was because I knew I was in business and wanted to be in control of my own finances. Most entrepreneurs do not have the advantage or the ability. Publishing DIY accounting is of the utmost importance because it could affect the financial viability of your business.

Use of booking information to prepare a tax return

The integrity of the financial information produced

Validity of historical data to work on future performance

Managing cash flow

Cost of keeping a professional

Time, effort and dissatisfaction with Keeping Your Own Brochures

Dealing With Increased Government Tendency to Review

Time and Effort to Learn About Accounting [19659002] Creating a Bookkeeping Process

Trust Factor

As You Can See Many Problems dealing with making the right choice. This is far, not all inclusive. There may be many other legal, financial and / or personal issues at stake. The point is that the task of creating and maintaining a collection of books and posts for small businesses is extremely important. The decision on how to do it should not be done on behavior or uneducated. Anyone who works a small business does not know what they do not know. The business of a company comes with certain duties and obligations. It is not known that there is a reason when the books and files are in doubt. I present it as the business owner, it is your duty to know exactly what the issues are and make an informed decision to deal with each of them. You are the default president of your business, which accompanies all related guarantees, including tax, legal and personal debt.

Reasons and excuses

Most, if not all beginners, take on the task of creating their own collection of books and files for a few simple reasons:

No funds to keep a professional

Limited number of trades

Disclosure of Personal Information

Understanding That It's Easy

The Probability of Postponing

Fear

Facts

Every company must submit a tax return. Accounting will be discussed. Millions of people choose to prepare their own tax return, which is another matter in itself. Let me take it before you go further. It's very easy and not because I prepare a tax return but because of the complex tax laws, both Federal and State.

I can compare the idea that an individual prepares their own tax return to extract their own teeth. When I was a child, my teeth came out naturally. I didn't have to go to the dentist to have them professionally pushed. Even if I pushed them out when I shouldn't have, my lasting teeth would grow in to cover my mistake that I was a dentist. As an adult, I know better. Hopefully, if you have a business you know better. Trying to prepare your own tax return would be the same as trying to be your own dentist.

It's simply too much at stake. Possibly miss write-off or even worse, over aggressive depreciation that leads to review and very unfortunate mistake of not incorporating your business and exposing your personal assets in lawsuits, just to name a few. If you haven't calculated my position on this topic, let me make it clear. Making your own tax return is a great mistake. If you are going to open a business you need to utilize the advice of a good accountant.

Coming back to doing it yourself accounting issues, another fact that is considered a financial aspect. This is true as most initials have zero capital initially. The idea of ​​investing in professional guidance takes a special shrewdness. One thing to consider is the very popular "Free Consultation". I do not know many professionals who would not offer original appointments to a potential new customer. It almost happens this case invalid.

If you decide to keep the professional to guide you, they will understand the financial issues involved. The right person will be ready to nurture you and your new business and come up with pricing that will work. Don't expect a good accountant to work for free and don't use a family member or friend who is ready to work for free. They will not treat you like any other customer for a simple fact that you are not. Some of the worst customers I always needed to work with were friends and families. The problem is that often I was carrying very bad news by putting myself in a defensive position. If you have a friend or family member in business, ask them to refer you to their partner. You will all be happy with what you did.

The remaining numbers should all bear in mind your personal mindset. Fear, Suspension, Perception etc. Need to be directly at the level of thought and I am not capable of dealing with these issues so I will not. Business and personal thinking coaches are in abundance today.

Twenty years ago, when Intuit offended USP that "You can save money by doing your own accounting" business training was not general. It was probably more in psychiatric or counseling states that were either very personal or too expensive for the beginning. Today, treatment and business training is a standard fare that really makes the matter think – are you serious about this business or not?

It really only understands one control to deal with; which is the volume of business. Is it really wise to seek the help of professional books when your business volume is at a minimum? This question leads to other questions, which parts are minimal? If it is not minimal, should you still create your own books?

Now I can really get into the subject of whether or not the owner of the owner should make his own account. First, let's begin with the definition of accounting. It seems obvious that issues that matter to a business need to be defined in order to make an informed decision.

Accounting Definition:

Work or skill to keep account books or systematic records of cash transactions (separate from accounting).

This is from yourdictionary dot com

Accounting Definition is keeping a detailed record of the transaction for an individual or business.

An example of accounting is the method of registering bank accounts each month.

So it's obviously very simple. Or is it? Where does one start? Which method of keeping files acceptable? What is the purpose of accounting? For these answers, I will refer you to the IRS version 583 Start of Business and Quotes.

Why keep records?

Everyone in business must keep records. Good records will help you do the following.

Keep track of your business progress.

You need good records to track your business progress. Files can show if your business is improving, what things are selling, or what changes you need to make. Good records can increase the likelihood of business success.

Prepare your financial statements.

You need good records to prepare accurate financial statements. These include income (income statement) and balance sheets. These statements can help you deal with your bank or creditors and help you manage your business.

Profit and Loss Account shows income and expenses of the company for a specified period.

Balance Sheet shows assets, liabilities and equity in a transaction on a particular day.

Know receipt letters.

You will get money or property from many sources. Your files may indicate the source of your receipts. You need this information to separate transactions from receipts outside a commercial bank and taxable from non-indexed income.

Keep track of deductible costs.

You can forget about costs when you prepare a tax return without taking up the tax when they occur.

Prepare your tax return.

You need good records to prepare your tax return. These records must support the revenue, expenses, and credits you report. Usually, these are the same files you use to track your business and prepare financial statements.

Support reported on tax return.

You must always keep your business records available for inspection by the IRS. If the IRS examines one of your tax returns, you may be asked to explain the details reported. A complete set of data will speed the test.

So, "why" is clearly established by one, if not recognized, existing today currency exchange service. Now the kicker is. On page 12 of version 583 Beginning of business and quotes, they define the types of files that hold:

Types of files to keep

Except in some cases, the law does not require specific types of files. You can choose any recording system that is created for your business that clearly shows your earnings and expenses.

I don't know about you, but this leaves the door wide open for misinterpretation. Let me go for a long and short time. Your books and records should clearly reflect the revenue and expenses reported in your financial statements. Your financial reports are used in the preparation of your right of return. For some kind of review, figures that are not clear about the origin and nature of each underlying transaction are suspected financial reports. Your financial reports should be clearly defined so that a person who does not know your business can clearly see the logic and methodology of how your numbers came. Not only do the numbers need to be clear and concise. Documents supporting these numbers must be enclosed. In accounting, this is called an audit trail.

If the audit trail has gaps, the numbers will be suspected and need further investigation. If you get in, this is a type of statement that can cause anxiety, stress and many hours of sleep. Albert Einstein said "If you can't explain it for six years, you don't understand it yourself."

Coordination on its own should compel any business owner to maintain a good collection of books and files. Most accountants take one and only positions. You have to do it because "they" say you do. It is not enough for any entrepreneur to complain. Let's face it, we're risky. Entrepreneurs are misleading at first and leaving a little obstacle such as the threat of auditing, government, insurance or banking institutions that gets in our way is bad.

For me, the most compelling reason to build a solid financial foundation is because you are serious about your business. Knowing your numbers is one of the mantras spoken of just about every success of the business owner. Think about it. Are some successful employers you can think of that do not have a solid hand on their financial information. This was what originally asked me to become an accountant. Knowledge of my numbers. Not only to show me what happened and to show me how I came where I was, but to help me find what I wanted to be.

Your financial information tells you a story about you and your business. If your story is full of holes and decorations, how can anyone take your intentions as serious. It takes a brave man to deal with their flaws and flaws and true financial information can be a scary material for you to deal with. If that is the case with you, I would strongly encourage you to take a closer look at you and your intentions. Are you in business to fill your own and create false hopes or are you in business to make a profit?

My talents

I believe that it is important that you understand the background and experience of my accounting. Being a CPA does not automatically create power over the content, although it does provide credibility. What is more important than my credentials is my experience. First, as I mentioned before, I became an accountant because I knew I would have my own business. That's a plural of reason. It was never a question in my mind that I was an entrepreneur. So first and foremost, I consider myself an entrepreneur and the CPA latter. What that means to you is that I approach this topic just like an entrepreneur would.

I graduated from SUNY Oswego in 1983 with a degree in accounting and started working for a tax office in Brooklyn NY. During my first two tax years, we made over 2,000 income taxes, all available. This requires calculations using additional tools as well as investigating the tax code in the actual book. We had no computers. From there, I continued to work with several companies that bought small business businesses. Again, it was a very small computer and just about everything was done by hand. From the rudimentary accounts all the way up to preparing advanced tax returns and financial statements. I began to work in managerial positions at some high-level companies to be strictly to solve tax issues. I handled all sorts of federal and fiscal statements, including negotiation, compromise deals, sales payroll, and business tax assessments, including some criminal investigations.

I have this because I find it very important to understand that I come from a bookkeeping accountancy book instead of an electronic accounting background. I learned first hand what they want to see and what red flags rise. Most accountants have never had the opportunity to cope with the amount of tax review I have. I didn't have the luxury of printing books and files from a computer program. We always had copies of books and files. This initial experience seemed to be invaluable when accounting became computerized. I knew first and foremost what was going to come out of these projects and too often the garbage that was shed was not even close to being typical of detailed books and records. When the authorities ask to see your books and files, they want to see a copy of everything. They don't care what kind of electronic system you used. You have to print it all out and show them your audit trail. If there are gaps you will have difficulty with. Computer change changed the landscape of accounting for small businesses and it was not in a positive direction.

In 2009, I started teaching people my remote accounting system with the aim of adding to my staff. Surprisingly, I enjoyed it very much and some of my students started landing their own customers and accounting. This experience focused on my entrepreneurship and I started learning.

I found that the best way for me was to educate and guide the business owners to succeed. It became clear that what small business owners really needed was a good set of books. My skills and experience allowed for that, I was very good at it and there were already plenty of training courses that teach success principles.

Since 2013, I have spent a significant part of my time teaching business owners and accountants about basic accounting articles to start external accounting.

Today's Status

Today I find it scary to see the quality of people referring to as books and records. This is no fault of the business owner. I am particularly concerned about the accounting profession because of this worsening of the financial system for small businesses. It is my fact that auditors were trusted advisors who were for the sole purpose of managing small business owners away from the untrue individual sales orders that Intuit described as "You can save money by making your own books."

You can assume what I have written so far that I am against small business owners making their own books. At one point, not too long ago I was 100% against the idea but today I have another opinion on this subject.

I believe that a small business owner today must actively participate in the production of books and files. It does not mean that business owners should make their own books. Making your own books means there is no guidance or instruction from a professional who knows how to create an adequate accounting system. Quickbooks, or other programs, are not accounting systems. Software, the same as pencil and paper, is just a tool to use in the accounting system.

There are not many areas of small businesses that can be done effectively by someone who has no knowledge, experience or skills to do so. I don't fix my own car or do my own marketing for the same reason, someone shouldn't do their own books. It is said to be very active in maintaining my car and working in and on my marketing system. The case is not whether you should make your own books. The question is which part or part of creating your books and records will be your responsibility, which items will be your auditors, and what items will be your bookkeepers if necessary.

Let's look at the definition of accounting once more:

This is from your bibliography

Accounting

Accounting definition is to keep a detailed record of the transaction for an individual or business.

Accounting is a process that at least ends with the preparation of tax returns. My opinion, based on my experience, is that no player can make their own books, on their own, and expect an accountant to produce a detailed tax return. There must be an interaction between the one who prepares the tax return and the one who collects the records. I suggest that accounting and bookkeeping done right must be a joint venture between experienced professionals, entrepreneurs, and accounting. Sometimes and almost always in the beginning, the bookkeeper can be the owner of the company.

The answer to the question of whether the owner of the owner should do their own books or not, is an unequivocal answer in my opinion yes and no. Accounting is a process that begins at the moment the first transaction takes place and continues to liquid every time another transaction occurs. Accounting is a detailed summary of information that requires teamwork to be able to complete accurately. Initially, this group usually consists of the owner of the company and the auditor. Now the owner of the business can be responsible for entering and coordinating all transactions but this does not mean "making your own books".

Every accounting system requires control. There must be checks and balances established to ensure that all business transactions are properly recorded on time. The only person with the knowledge and experience to design and review accounting systems is a good accountant. Accountants do not design systems, they keep them. There lies the root of the problem. When business owners make a genuine decision to make their own books, they inevitably take on the task of developing their own accounting systems.

It is not really a question of whether the owner of the owner should make his own account or not. The real issue is who has developed the system and who is responsible for managing it. I argue that this is the accountant's accountant and accountant who allows their customers to simply enter into what they have and try to make a tax return with suspicious information to make their customers a serious injustice. Before the low cost computer software this would have been unfathomable.

A great accountant will educate his client on what needs to be done to create an accurate set of books and files. This is our job as a trusted advisor. Business owners did not make a mistake when they decided to "make their own books", accountants did not embrace the concept and become an integral part of the process. Instead of releasing QuickBooks as an inferior accounting plan and letting their customers out, they should have educated themselves and their customers on how to bring this new technology to the best of their customers' needs.

The Solution

The idea of ​​trying to do something on your own in business can be a smooth deficit. The first question you need to ask yourself is how serious you are about this business. If you are not so serious and are just about to get some money, go ahead and do everything yourself. I don't say it sarkastically. There are millions of small businesses out there because the business owner decided that this was just a part-time "business" that generates a small amount of income and dubious tax credits. I say questionable because, by definition, IRS needs a company goal to make a profit. If a company breaks or loses money every year, you run a very good opportunity to be classified as a hobby.

For those serious entrepreneurs, I believe you must actively participate in the production of your books and records, along with the accounting records that follow. This can only be done with a pre-active auditor. The accounting process is an endless system that combines a growing number of accurate transactions. This will require constant adaptation and education for all parties involved. The accountant must inform about all transactions that occur and the proposed transaction, but the entrepreneur must be at the top of the results and comparative views. In other words, when an entrepreneur does something and expects it to be profitable, the accounting system should be structured to provide reliable and reliable results.

The only real solution to "doing your own accounting" is "how should we make our accounting right?". There must be cooperation. Apple Computer would never have been if it were just Jobs and Wozniak. They needed the financial guy who put all their ideas into financial reality. It's just as obvious an example I can come up with, but the truth is as I said before. The success of the business owner will tell you that their numbers are key to their success.

Practical work

I see no real way about the fact that when the entity begins the owner should and must be the bookkeeper. I will do it by saying this – as long as it is done right and in relation to the accountant. When a business starts at zero, and even if it is not, I believe that education and experience are gained by keeping your own books invaluable. Knowing your numbers involves knowing how the numbers must be where they are. Make business decisions, create new revenue streams, keep costs down, and high profit levels require knowledge of these facts and figures.

Where to start

You need to start with an active accountant who does not expect you to simply drop your bank accounts and check stubs. If you are working with an accountant who does not ask you questions, you should start looking for a new accountant immediately. When I first started doing this business, what auditors did. We asked questions about the company and about the financial standing of the client. For most small business owners, companies they are running are their main income and their personal finances are not in part. They are linked but unfortunately most auditors have lost sight.

You should form a mastermind with your accountant with the goal of being your financial success. If you do not know the MasterMind concept, I encourage you to learn about it. In short, MasterMind is created when two or more individuals participate fully in achieving a common goal. What I suggest is that your accountant should not just be a historian explaining what has already been in your business. You already know.

I suggest that your accountant should work with you and your bookmarks to publish your financial information to understand how you are and more importantly, how to use that information to find out what you want to be.

Your accountant should set up appropriate tools and information to help you succeed. This involves acquainting you with information on transaction data, processing accounts, recording payroll and paying payroll taxes, the type of software you use and when it will be wise to enter a professional accounting meeting.

Conclusion

Accounting becomes a partnership and yes, you should be an integral part of the accounting process. I believe "doing it yourself" should not be the best terms to use. Making your own accounting doesn't mean you should be doing it alone. Accounting requires professional guidance, education and experience of first hand in the nuances of accounting and accounting. You have to be part of the process so if your business starts, you will be in a position to hire not only your bookmaker but train them. You and your accountant will train them so you can devote more time to expanding your business. Isn't that why you started business in the first place?

SOURCE SBOBET

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