Accounting – A Necessary Evil?

Our firm works with hundreds of businesses of all shapes and sizes.  Though there are many different business structures and industries, there are many commonalities. Our business clients are usually focused on sales, cash flow, and growth. Accounting needs are often considered a necessary evil rather than a priority.

Oftentimes, one of the owners or a family member is tasked with handling the dreaded accounting responsibilities. They might have worked at a bank or taken an accounting class in college. Fast forward a few months or a year and the time comes to prepare tax returns or provide financial statements to the owners, a bank, or another third party. Over time, it comes to light that the accounting records are in a mess. While QuickBooks and similar software platforms are easy to use and can be very good solutions for an experienced accountant, they are also easy to foul up. The result is inaccurate and unreliable reports, incomplete records, and a seemingly impossible and costly task to put it all back together. Like everything, it is much easier to get it right the first time, and in the end, much less expensive.

The ability to prepare accurate and timely financial statements and tax returns is a very important part of owning or managing a business. In addition, keeping a keen eye on the business’s financial condition will help you grow, adapt, and thrive in an ever-changing world. Sound accounting processes and financial reporting truly are a competitive advantage.

There are several options for solving the accounting puzzle.  Here are some thoughts to consider:

  • Embrace technology – Cloud-based accounting software platforms like QuickBooks Online can be integrated with a bill payment solution like so all payments are digitally approved and disbursed electronically or mailed from a central processing center, and it can all be managed from anywhere in the world.
  • Fully outsource the accounting responsibilities – When done correctly, this option can be friction-free and lets owners devote their time to the business.  Many times, it is less expensive and has a better result than hiring a dedicated full-time bookkeeper.
  • Partially outsource the accounting responsibilities – When you have the personnel to do it, handle some parts of the process internally and rely on an experienced accountant to take care of the rest.  We have many clients who rely on their internal staff or owners to record the day-to-day transactions such as invoicing clients, making deposits, and paying bills.  Each month or quarter, we review the accounting records and make any necessary corrections and reconcile the bank accounts. They are never more than a few weeks or a couple of months behind.  At year-end, it is relatively easy to close out the year and produce an accurate and timely tax return. As a bonus, the client staff person responsible for accounting generally gets better over time as they work with our team.
  • Full or part-time internal accountant – Hire an employee or perhaps an entire team to handle all facets of the accounting process internally.  Sometimes, an in-house accounting department is the only practical solution, particularly once businesses grow larger and need people on a full-time basis.  Unfortunately, in the current environment, it can be very hard to find the right person or people.  If you don’t have a background in accounting, consider relying on your Dent Moses advisor to help evaluate the skill set of the candidates during the interview process.  This might save you a lot of headaches down the road.

We would love to help evaluate your current accounting processes and make recommendations.  If you have questions or comments, please contact your Dent Moses advisor.