Checklist: Setting Up a New Business Accounting System

The appropriate accounting software will help stream your financial processes, cut down the time and money you spend, and give you the insights you need for informed decisions. 

Whether big or small, there are accounting solutions that fit individual needs. From managing invoices and expenses to payroll and tax reporting, the right software empowers you to focus on what matters most—growing your business. Explore the best accounting tools to simplify your financial management and take your business to the next level.

  Checklist for Setting Up a New Business Accounting System
It is always important to set up a reliable accounting system in any new or reorganizing business. A well-structured system ensures the accuracy of tracking income and expenses, compliance with regulations, and better financial decision-making. With these key steps, you can establish an accounting system that will meet your business needs.

  Choose the Right Accounting Method
The first decision is to choose an accounting method: cash-based or accrual accounting. Cash-based accounting records transactions at the time that money is received or paid, so it is often best for small businesses with simple finances. Accrual accounting records revenue and expenses at the time they are earned or incurred, providing a more complete view of finances. Consider the complexity of your business and your reporting needs when making this decision.

  Select Accounting Software
Next, select an accounting software that meets the needs of your business. It must have features such as invoicing, expense tracking, payroll integration, and financial reporting. Cloud-based systems provide access and collaboration, and on-premises systems give greater control. The solution also needs to be scalable to grow along with the business and easy to integrate with other software tools like CRM.

Here is a list of popular accounting software solutions you can consider:

• QuickBooks Online: 
  QuickBooks Online is known to provide features such as invoicing, payroll, tax tracking, and expense management using an easy-to-use interface. It is suitable for small to medium-sized businesses and provides cloud-based access.
  
  
• Xero: 
  Xero is cloud-based accounting software that provides features like invoicing, payroll, inventory tracking, and bank reconciliation. It’s suitable for small business operations and has strong integrations with third-party applications.
  
  
• FreshBooks
  FreshBooks is the most simple and intuitive accounting solution for small businesses and freelancers. It specializes in a specific area: invoicing, time tracking, and expense management, and it tries to be as easy to use as possible.
  
  
• Wave Accounting
  Wave is a cloud-based accounting solution that offers free services, including invoicing, receipt scanning, and basic accounting. It is very affordable but lacks some higher-level features, such as inventory management.
  
  
• Sage Business Cloud Accounting
  Sage is a cloud-based accounting system that is scalable and can be used by small businesses and large business units. It has features such as invoicing, expense tracking, payroll, and advanced finance management with reporting.
  
  
• Zoho Books
  Zoho Books is cloud-based accounting software that offers features such as project tracking, invoicing, expense management, and time tracking. It would be an ideal choice for small to mid-sized businesses, providing automation and integrations with other Zoho products.
  
  
• Microsoft Dynamics 365 Business Central
   This is an all-inclusive enterprise resource planning (ERP) system with accounting functionality, inventory management, and CRM integration. It is ideal for medium to large businesses with complex accounting needs.
  
  
• NetSuite
  NetSuite is a cloud-based ERP system that offers full accounting features, including financial planning, billing, and revenue management. It is suitable for growing businesses with advanced accounting and operational needs.
  
  
• Kashoo
  Kashoo is an easy-to-use, cloud-based accounting application that includes functionalities like invoicing, tracking expenses, and financial reporting. It is suitable for freelancers and small businesses seeking simplicity and cost-effectiveness.
  
  
• AccountEdge
  AccountEdge provides a desktop-based accounting software application with robust features like invoicing, payroll, and reporting. The best use of this product is in small businesses looking for a strong on-premise accounting solution.
  
  
• QuickBooks Desktop
  QuickBooks Desktop is the on-premise version of the widely known QuickBooks software. This offers the business very strong accounting capabilities if it has a preference to maintain data locally and not in the cloud.
  
  
• Wave Financial
  Wave provides free, cloud-based accounting software with features such as invoicing, accounting, and receipt scanning. This option is good for small businesses and freelancers with tight budgets.
  
  

By selecting the right accounting software for your business, you’ll be able to manage finances more efficiently, ensuring smooth operations as you grow. Consider what features matter most for your business size and complexity to make an informed decision.

  Develop a Chart of Accounts
A chart of accounts would serve as a backbone within the accounting system, taking in all sorts of business financial transactions with categories labeled such as assets, liabilities, revenues, and expenditures. Design this to indicate specific business operations and your intent for readability in recording your finances. A  designed chart enhances bookkeeping, reporting, and filing taxes.

  Implement a Transaction Management System
Set up a reliable system of recording and managing transactions: income, expenses, vendor payments. Leverage available automation tools within your accounting software to reduce errors caused by manual entry and increase the efficiency of your procedures. Regularly reconcile bank accounts to ensure that what is recorded in your financial records is in agreement with actual financial activity.

  Establish an Invoicing and Payment Process
Efficient invoicing is key to maintaining cash flow. Design professional invoice templates containing your business name, contact details, itemized charges, and payment terms. Use automated invoicing tools to send bills promptly and follow up on overdue payments with reminders.

  Set Up Payroll Management
If your business has employees, implement a payroll management system. Track hours worked, calculate wages, and ensure proper tax withholding. Many accounting platforms have payroll integration that allows for easy processing and compliance with labor laws.

  Schedule Regular Financial Reporting
Financial reports, such as the profit and loss statement, balance sheet, and statement of cash flow, have a wealth of information about your business. Schedule and automate the reporting process as monthly, quarterly, or yearly. This will check your finances regularly, using these reports to make necessary decisions and identify areas needing improvement.

  Ensure Compliance with Tax and Legal Requirements
Lastly, ensure your accounting system adheres to all regional, state, and national legal requirements. Establish a calendar reminder on key reporting due dates and taxes, tax payments, among others- hence, increasing chances for the avoidance of levied fines in case some reporting isn’t done correctly in a timely.