Business owners, especially the busy multi-tasking ones, need to create as many internal efficiencies as possible. They simply don’t have the time in the day or the mental capacity to spend hours ‘working the problem’ or ‘figuring things out’ when their efforts could be better spent. A common business owner complexity is the financial health of their business. While they understand keeping accurate records is essential and they strive to do so, very often they grow frustrated by the fact that bookkeeping and accounting always feels like one giant game of catch up.
At Accountfully, our team focuses on helping business owners simplify their bookkeeping and accounting. We make sure finances are proactively managed and clients have access to real-time data. This comes from understanding and appreciating the need to stay ahead of potential of both problems and opportunities. One of the surest ways to do this is by creating and maintaining an intelligent chart of accounts.
The chart of accounts brings all business accounts together in one place to provide the business owner with a better understanding of how and where their business is spending and making money. Rather than parsing through different accounts and trying to make sense of siloed information, the chart of accounts gives business owners an efficient bird’s eye view of the inner workings of their business. Having access to this information creates opportunities for business owners to understand department spending and profits.
What is the risk of not having a solid chart of accounts? It means that the business could be spending or losing money without the business owner being aware of it. Here are some things to know about a chart of accounts:
The chart of accounts includes a detailed report from these account areas: assets, liabilities, stockholders’ equity, revenue, and expenses.
The chart of accounts generally has at least three columns organized into
Account: This lists the account names.
Type: This lists the type of account — asset, liability, equity, income, cost of goods sold, or expense.
Description: This contains a description about the type of transaction to be recorded.
The chart of accounts can be modified and changed as a business evolves. Note: don’t delete accounts mid year—wait till the end of the year when everything has been reconciled. As far as creating new accounts is concerned, go right ahead.
To be useful, the chart of accounts must be maintained. Out of date data is almost as bad as no data at all.
At Accountfully, our team creates, reimagines, and maintains our clients’ chart of accounts. We help them add it to the many tools they already have in their business owner toolkit. When maintained properly, the chart of accounts is an incredibly helpful and can act as a financial map for business owners to use and make decisions about the future of their business.
Accountfully is an outsourced bookkeeping and accounting firm headquartered in Charleston, SC. With an additional office in Nashville, TN, we serve modern brands and businesses across the country. From pre funded startups to multi-million dollar companies, our clients are visionaries across all industries.