The manual accounting system has advantages and disadvantages.Your accounting system? There is a better way!

Developing Your Accounting System
Learn To Evaluate Your Recordkeeping System

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by L. Kenway BComm CPB Retired

Published March 2009 | Edited October 3, 2024

WHAT'S IN THIS ARTICLE
Learning QuickBooks | Do You Go No Tech, Low Tech, or Affordable Tech? | Accounting system procedures 

RELATED ARTICLES >> Overcoming challenges of getting and staying organized |   Your chart of accounts


Your bookkeeping system is more than just the physical ledger or accounting software program you use. It encompasses the method you setup and use to …

  • track each receipt received and invoice issued as it progresses through your record keeping system
  • to the final products - a set of financial statements and accounting reports along with your annual tax return.

Maybe it's time to upgrade from your manual system and embrace some of the fabulous affordable technology out there.

Welcome to Bookkeeping Essentials - The Accounting System!

There are so many choices when you are starting up your business … and when your business is growing.

Setting the groundwork by having an bookkeeping system in place will help you on the road to success and keep you out of trouble with the government tax assessor.

The Three Rules of Work

1. Out of clutter, find simplicity.
2. From discord, find harmony.
3. In the middle of difficulty, lies opportunity.

-- Albert Einstein --

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The best advice always is to keep it as simple as possible. Lisa Kleinholz said it best back in 1991 ... remember the success or failure of your business could come down to these two choices

  1. How you decided to keep your company’s books; and
  2. how skilled you were at keeping the books.


Executive Summaries

Following are executive summaries of the chats I've put together that provide instructions on the practical side of setting up your small business accounting system processes and procedures.

Accounting Systems Options

Small Business Accounting Decisions
Do You Go No Tech, Low Tech, or Affordable Tech?

When deciding on your small business accounting system ... how do you decide what method is best for you and your business?

The article A Yardstick to Evaluate Your Book Keeping System has system criteria and questions to ask, to help you make the right decision.

There are times when a manual system is a perfect fit ... but I will tell you that the reason I don't use manual books for my business, is no reporting.

You spend hours compiling the data and have no reports ... and the inability to search or look up a transaction or series of transaction with the click of a mouse. It's virtually impossible to use any of the data to help me make business decisions. What a waste!

Entering data, without analyzing data, is operating your business on incomplete information. The computer reports generated by small business accounting software packages systematically organizes and summarizes your data in a way that is useful to making business decisions.

If you are a visual person instead of a numbers person, most small business accounting software can present the information graphically ... so you can easily see patterns or trends.

Having said all that, if you are doing manual books, you might be interested in how to do a quick calculation to see if you are profitable instead of waiting for the preparation of your tax return. Make sure you follow the link at the end for a quick method to estimate your cash flow as well.


A yardstick to measure your bookkeeping system.

Small Business Accounting Decisions
A Yardstick to Evaluate Your Book Keeping System

Whether you are just starting out or have been in business awhile, how do you know if your book keeping system is the right one for your business? There are just so many choices.

In this article, you will find questions to ask ... and a list of criteria to help you make the choice that is best for your business.


Learn how to protect your assets and prevent fraud.

Small Business Accounting Decisions
What About Internal Controls?

This article is only available to subscribers with an Insider's Pass. Click here to access the article.

A discussion about how some simple internal controls and segregation of duties can reduce the probability of fraud and help ensure that future tax audits go well. It only takes one bad tax audit or one successful embezzlement scheme to put your business' survival at risk.

Getting Organized
Simple File Organization Systems

Don't believe the person who tells you there is only one right way to organize your business records. Explore your options in this series of chats. Find one that will work for you!

If you've gone paperless, you'll want to check out these three chats?

  1. How do keep my electronic documents safe and secure? (Sorry this guide is no longer available. I'll work on getting the information updated in 2022.)
  2. Can I shred scanned receipts?
  3. Do I need to download paperless statements?


Accounting Systems Software Articles

Bookkeeping and accounting software options

Small Business
Bookkeeping and Accounting Software

This is the place to look for information on bookkeeping software packages that are a good fit with a small business operation.

You'll also find three chats I think you'll find interesting:

  1. How to Change Your Bank Statement Into An Income Statement
  2. Three More Accounting System Options to Consider one of which is a free excel template
  3. How to Track Sales Tax (GST/HST) in a Manual System



Learn Bookkeeping Basics

QuickBooks Online Beginner Guide
Bookkeeping and Accounting Software

This is an introductory guide to learning QuickBooks Online. It covers (i) the basics to get started, (ii) QBO workflows, (iii) after the data entry, (iv) advanced features and add-ons, (v) key takeaways.

Time to learn how to fix common QuickBooks errors.

QuickBooks Desktop
Bookkeeping and Accounting Software

My preference is the QuickBooks accounting system - both desktop and online versions ... so take a look at what I've written up about QuickBooks Desktop:

NOTE: This article is archived and will not be updated as I no longer use QuickBooks Desktop. Since 2019, I use QuickBooks Online exclusively.

Learn how to use QuickBooks.

Learning How to Use QuickBooks
Avoid Beginner's Mistakes

You will find QuickBooks Online tips for common bookkeeping entries, some shortcut keys, and how to avoid beginner's mistakes.

Kellie Park Calmwaters, CPB teaches you how to optimize your Chrome browser to improve your QBO workflow. You need to know this stuff if you are using QBO. It will give you a better workflow experience and possibly reduce your frustrations when moving from QBD to QBO ... they are two different workflows.

Marnie Stretch, CPB shows you how to refund to a debit card or you can check out this chat on how to process a supplier refund.

My newest chats shows how to handle inventory returns of damaged goods and the associated CBSA duties and CBSA GST associated with importing product into Canada.

If you want to move your books from QuickBooks Desktop (QBD) to QuickBooks Online (QBO), there is an archived chat on why your balance sheet doesn't match after a QuickBooks Online (QBO) conversion. 

I also have archived chats on how to setup QBO Canada sales tax codes for the meal split and self-assessing PST. You can also learn how to sync your PayPal with QBO.

Recording a foreign wire transfer is a complex transaction. You'll find step-by-step instructions on how to record a wire transfer in QuickBooks Online.

Rachel Fisch explains how to use Hubdoc to upload bank CSV files to QBO.

There are also posts from The Learning QuickBooks Forum. This forum is now closed but the questions and answers are still available for viewing.


Accounting Systems Procedures and Set-up

Your Accounting System - Short Articles
Things You Should Keep in Mind

  1. The Blueprint of Your Small Business Accounting System - Your Chart of Accounts
  2. Let's Chat About ... The Consistency Constraint
Starting a new business

Just Starting Your Own Business?

When you are just starting your own business, the number of decisions to be made can be overwhelming. Your accounting system is just one of them.

You will find a listing and link to government initiatives that can assist you if you are a small business owner in Canada.

You'll also want to check out DonnaLynne MacDonald's Small-Biz-Help-Desk.com ... find out more in Other Resources.


Accounting procedures

Accounting System Procedures
Who Does What and How They Do It

Developing processes and procedures for your accounting system every step of the way in your business is essential so you can stop reinventing the wheel every time you start a new task.

Good practices and habits in bookkeeping mean accurate and timely financial statements to run your business with.

Here are some:

  1. tasks to complete before performing month-end
  2. month-end procedures;
  3. accounts receivable collection procedures;
  4. accounts payable management;
  5. internal controls you may want to consider implementing, and
  6. year-end preparation.

A list of  daily, weekly, monthly, quarterly and annual bookkeeping tasks can help establish procedures and a routine. My bookkeeping checklists are available for purchase here.

Let's Chat About ...

A Basic Accounting Guideline
The Consistency Constraint

There is usually more than one way to do something ... and it is no different in bookkeeping.

The consistency constraint says that in order to have a high degree of comparability in your bookkeeping data, you must consistently apply the same procedures and methods from period to period.

It also means that industry practices should be taken into account ... so the information is useful and valid. Consideration should be given to substance over form when applying GAAP guidelines.

It is also imperative that any departures from this principle of consistency be fully disclosed on the financial statements.

This enables a reader of a financial statement to assume that GAAP has been followed consistently during the preparation of the financial statements.

So as a bookkeeper of small business accounting ... to ensure you have relevant financial statements, you must apply this principle to your data entry.

If you end up treating an item incorrectly (from your accountant's perspective), it is easy to make an adjustment if your accountant knows you handled every transaction in a consistent manner.

Why put this principle in place? ... So figures cannot be manipulated solely to increase or decrease the bottom line.

Wrap-Up

Taking the time to choose and develop your accounting system will provide long term benefits.

It is the gateway to having timely and accurate financial reports so you can ...

  • meet all of your financial and tax compliance obligations and responsibilities, ...
  • including assisting you in audit proofing your tax return.

(WOW that was certainly a mouthful!)

Remember as you put your system in place to make it simple to use and easy to understand. Find the compromise between your needs as a business owner and your bookkeeper’s needs.

To profits and positive cash flow!



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