You may have decided to start your own business to follow what you are passionate about, pursue an opportunity that you have identified or have had to due to unforseen circumstances. Irrespective the reason, you need to wrap your head around the fact that in addition to building and running your new business, you need to maintain records accurately.
Is it necessary to use a complicated accounting system?
Very simply – no, it’s not. For centuries, records were maintained manually – on tablets right through to book ledgers VERY successfully. However just as the arrival of computing power killed the typewriter, with the arrival of ever improving accounting software solutions, most people have started using some derivative or another.
There is ABSOLUTELY nothing wrong with a new business maintaining their records in a combination of e.g. Microsoft Excel and Word or Apple’s Numbers and Pages for financial records and invoices respectively But, these have inherent limitations – so if you are not disciplined and have some experience, it is extremely difficult to ensure ALL records are maintained accurately, on time.
For this reason, all businesses eventually need to shift across to using an accounting solution of either their/their accountant’s choice. Where the choice is made by your accountant, he/she will select a system that THEY are comfortable and familiar with so whether it is easy for you to maintain is not really a consideration.
What do you really need?
An accounting system MUST enable you to:
- Prepare Quotations and Invoices – to record revenue for tax as well as track all sales made on credit – specifically when they are due for collection;
- Capture all expenses that you incur;
- Record all purchases that you make using credit and keep track of when payment is due;
- Keep track of any assets that the business owns;
- Record GST implications for reporting purposes;
- Prepare periodic bank reconciliations; and
- Prepare Financial Statements for tax purposes or for the bank, should you look for credit.
There are MANY other modules that may be required but these are the fundamental basics.
With some training and experience, the accounting for all of these tasks is actually quite simple, but most small business owners are afraid to try, in case they make a mess of their records.
It is our view that if our screen designs enable us to get all the information about what it is that you are doing, then we know what accounts are affected and what journal entry is required so we can do the accounting in the background.
How LIAD Accounting helps
We have built our system from scratch and have tried to provide straight forward screen designs. By effectively recording your bank transactions and sales or purchases made on credit, LIAD Accounting prepares the journal entry required to update all your records. Where more complex actions are required – e.g. writing off Bad Debts or issuing Samples, we have addressed this with one click actions, followed by screens that once again simplistically capture exactly what you are doing, so that the system can automatically update all the affected accounts.
As a LIAD Accounting User, you are not required to set up a chart of accounts, you select from a drop-down list of options, actions or in/outflow types that describe what you are doing and the system does the rest.