What are the best accounting practices to use for any organization?
Accounting is a department in every organization which defines the core processes to establish, manage and maintain the finances of a business. In today’s fast-paced business environment, having well-developed accounting practices is very important for a business to be successful.
Accounting best practices start with preparing and budgeting the business plan. This will help get a better understanding of how to go about managing the finances. This is then followed by managing the books daily. Transactions take place every day and even if the human brain operates at its full capacity, we won’t be able to remember everything. So, to run its operations smoothly, maintaining daily records is essential for every start-up or a well-established business.
Moreover, maintaining the employee attendance records and working hours is also important as this will help calculate salaries at the end of the month and it would also show if an employee has worked overtime or not. Companies have their ways of monitoring the attendances, some use biometrics in and out, some use login software's, etc.
Accounting is all about finances, so a very important practice to keep your finances up to date is the regular recording of all the bills or receipts of purchases, sales, expenses, and others. This also includes receipts from the debtors and records of payment to the creditors. Keeping these records of the payables and receivables will help streamline all the accounting processes as the accountant would get a clear picture of the cash influx and the business's liabilities.
Furthermore, creating monthly balance sheets, and profit and loss statements, and reconciling them with the bank statements is also very important to get an overview of what has the company achieved. This will highlight all the places where a company has incurred losses that can be avoided in the future. In addition to this, submitting and paying the tax liabilities before the deadline will prove to be beneficial for the business as well. Lastly, automation of these processes can also greatly be of use to businesses as it will minimize human error.
These records can be maintained manually by accounting professionals, or they can also be done by using software like Xero, FreshBooks, Zoho Books, etc. Following these practices can lay a good foundation for your accounts, prove to pave the right path for your business, aid with streamlining all the accounting processes, and help generate profits.