At the start of the year, you have a brand new chance to improve the financial status of your business. Taking some simple steps now can make a big difference in improving your business throughout the year. Follow these steps to start your accounting year right!
Back Up Your Data
How often do you back up your data? You really should back up your data on a regular basis, and then check to be sure the backup was successful. The New Year is a great time to start implementing this process and making it part of your ongoing procedures.
Make Adjusting Entries
Make adjusting entries to balance inventory and payroll liabilities. Check all accounts payable and accounts receivable reports to be sure the amounts are accurate. Also, write off any bad debts.
Reconcile Bank and Loan Accounts
Reconcile all cash, loans, credit lines and credit card accounts with their statements. Compare the reconciliation reports to your balance sheet to be sure the amounts match and to ensure you have an accurate balance sheet. By not reconciling, you could end up with a payment due that you had not planned for.
Print Year-end Financial Statements
Print the year-end financial statements including an income statement, balance sheet and a general ledger report.
Review Customer Aging Report
Review your Customer aging report; check to see if any balances need to be written off or turned into collections. Also, refund old overpayments and deposits.
Take Fixed Asset Inventory
Verify that the fixed assets on your books are what you still have and vice versa. This is a step that most businesses forget to take, and once they do, they find out there are things on the books they haven’t had for years.
Verify Coordinating Sub-ledger Accounts
Verify that your inventory, accounts payable and accounts receivable balances match your coordinating sub-ledger. For example, be sure the balance on the accounts payable account in General Ledger matches the balance on the accounts payable aging report.
Create a New Budget
A new budget should be created well before the New Year starts. However, the start of the year is a good time to begin actually following the budget. Start the year right by making it a habit of paying attention to your budget and where your business stands. You are more apt to make money if you have goals/plans in place, which can all be planned out and recorded in your budget.
Create an Actionable Customer List
Create a list of customers who did NOT purchase from you in 2011, and put an action plan in place to get those customers BACK.
Implementing a new payroll software system can be a daunting task. There are some standard steps to anticipate when setting up the software system, regardless of which payroll system you choose to use. One crucial step during the setup process is deciding whether to set up multiple companies/employers in separate databases or to combine them. This decision can greatly affect how you view and analyze your payroll data, so it is important to take some time to consider which option is right for you and your business. Learn more about which database setup may be right for your company.
When setting up your new software system, be sure to consider what a database means before setting it up in your system. A company/employer is typically defined as a tax entity with financial activity. This allows multiple companies/employers to share a database, if they are part of the same operation. Companies/employers can then share accounts and analyze the combined data. At the same time, each company/employer maintains separate financial records. Be sure you understand how your software handles this before starting to set up your new system.
There may be circumstances that are better suited to setting up separate databases. If you have more than one company and they do not share the same type of activities, share the same type of accounts, or you do not wish to combine data from all companies in an analysis, you may want to consider setting up separate databases, rather than combining them into your payroll system.
When your database is set up correctly, you will be able to quickly pull and analyze your payroll data in a way that is most meaningful to your business.
Many businesses can benefit greatly from project accounting software. If you have large projects that happen over a span of weeks or more, you are likely entering many invoices and paying invoices as the project continues. As time goes on, you will want to know where you stand on income and expenses. Enter, project accounting software. Using a project function within your accounting software allows you to maintain income and expenses for specific jobs or projects. Assigning a project to each of your transactions provides an easy way to track the cost of a project. Some programs also allow you to assign projects to labor costs, for even more accurate project cost calculation.
Who needs project accounting software?
There are three main scenarios for which project accounting can be useful.
- Bids/Jobs
Companies that manage ongoing projects and projects that require job bids can benefit from project accounting software. Tracking the income and expenses of a project lets you see at any given time where you are financially with your project, so you can make adjustments if needed.
- Traveling/Shows
Companies that travel and do business at events, or companies who simply want to track the effectiveness of trade shows can use project accounting software to see which events are the most profitable. When you use project tracking, it’s easy to run a report and see how profitable that event was, which can help you decide which events are most profitable.
- Internal projects
Are you building a new warehouse? Remodeling your office? Use project accounting to manage and track your expenses so you don’t go over budget.
How does project accounting software work?
A typical project accounting system works by tracking each expense and purchase and attributing it to the project you have set up in the system. So, you first set up and name your project. Then with every income and expense invoice you enter, you need to be sure to choose your project. Most systems will display a “project” field for you to choose from. If you enter an invoice and forget to choose the project, of course that invoice will not be attributed to that project. Don’t forget to add the same project to your payroll software system, if that system allows for project tracking. Adding project tracking to your payroll can help you also track labor expenses to your project, which is likely an important component of your project’s cost. Once transactions have been entered with the appropriate project, you can run reports and filter them by projects.
Is project accounting software the same as job costing software?
Project accounting software and job costing software are similar in function, but there are some major differences. Job costing software offers the ability to track the status of a job in progress as well as the income and expense; whereas project accounting only tracks the income and expenses. Job costing also lets you assign the parts of a job to a class or category. You can see what’s been billed for that project, as well as the status, retainage amounts, and more detailed information than you would find in project accounting. Job costing is typically a more complex system; whereas project accounting can be set up and used fairly quickly within your accounting system.
If you are looking for a way to track income and expenses to your project(s), project accounting might be a simple way to accomplish that! Why not set it up in your accounting system and give it a try today?
We were happy to hear this comment from Red Wing Software customer, Eugene Glock from Cedar Bell Farms in Rising City, Nebraska. Here is what Eugene has to say about CenterPoint!
Eugene Glock will tell you he is a lucky man, but what he might not tell you is that the financial information for his farms and entities is meticulously organized, and because of this he is keenly aware of which areas of his business produce his highest profits. While Gene is a humble man, he is the poster child for smart farm accounting, and for using CenterPoint Accounting for Agriculture to its fullest capacity. Maybe it’s not luck after all!
“CenterPoint is a great improvement on the software we used previously,” says Eugene, “It works faster and does some things automatically that our prior system did not. “ Eugene breaks everything down by crop: irrigated corn, dry land corn, etc. He also keeps each farm separate. This way he can always tell which farms and crops are most profitable. “One helpful thing about CenterPoint is that when we need to borrow money, we can easily provide accurate cash flows to our bank, which they really appreciate. We can also see live, up to the minute financial information.”
“I have really appreciated the recurring transaction features in CenterPoint. We split out our expenses by different enterprises, by percentage. (For example, a percentage goes to the office, a percentage to the farm, etc.) Our prior system had recurring invoice function, but it didn’t allow us to split it up by percentage. It has been a huge time saver for us.”
“No matter how perfect a software program is, there will always be some problems or issues along the way. The people at Red Wing Software are really great. I don’t know where they find these people, but they are just so patient and helpful. I think each one of them has helped me at some point. If you want a software product that will provide you service after you purchase it, you want Red Wing Software and CenterPoint. For the return on investment, CenterPoint is better than most investments!”
If it works, don’t fix it. I’m sure everyone has heard that statement, but is this philosophy always good to live by? That depends on what it is that “works”. In some cases, you can get away with letting things fail, and then take the action to fix or replace them. In other cases, it’s a good idea to fix things at the first sign of trouble, and sometimes things should be “fixed” even before anything appears to be wrong. Let’s take a look at a few examples.
Let’s say the speakers on your computer are making a funny noise, and it’s not because you’re watching hilarious YouTube videos. It might be okay to put up with the noise because if the speakers fail, it’s probably not critical to running your business. Or, your car is making a noise that you have identified and it is not compromising safety. In this case, you can turn the speakers up and not hear the noise anymore.
A while back, I saw oil coming from underneath the engine of my airplane. It was running fine, but was sending me a message that something was wrong. This got my attention right away, as I don’t have a backup in case it decides to fail. I fixed it!
Speaking of backups, how is your computer running? I’ll bet it’s running just fine, so why would you need to back up your information? Computers rarely give you a sign that something is about to go haywire. That doesn’t mean you don’t need a backup. And, while we’re talking about technology, how old is the computer and/or software that your business is relying on?
Eventually, the computer will fail, and the old software on it may not run on new equipment. Are you prepared to re-enter all of the information you need to run your business because your data will not move to newer software? Think about it.
Sometimes things need to be fixed, even if they still work.
Ken Hilton, President