Outsourced Accounting: What Should be Done and When

Posted on September 29, 2015


Making Sure Your Outsourced Accounting and Internal Accounting are Meeting Requirements

outsourced accountingWhen you are managing your business through a combination of outsourced accounting and internal processes, you may wonder if you are taking all the necessary steps to be ready for tax preparation, as well as effective financial management. It’s a good idea to keep a checklist of all the tasks and reports you need completed for a given period. Here is a basic list of required documentation:

Daily Accounting

  1. Check cash position. Think of cash in a similar way that you think of gas for your car. You automatically check the gas gauge when you are driving, so do the same with your cash. It’s what fuels your daily operations.

Weekly Accounting

Record transactions, such as billing and cash receipts and payments to vendors in the proper accounts. You can use accounting software like QuickBooks.

  1. Manage receipts, by documenting and filing as appropriate. Keep copies of invoices, cash receipts and cash payments. Use a vendor file to organize them and take care not to let the receipts pile up.
  2. Review unpaid bills you have received from vendors and keep in mind factors like discounting for early payment.
  3. Make payments to vendors and sign checks.
  4. Send invoices out to your customers, including payment terms.
  5. Look at your projected cash flow, particularly during your first year. This will help you reserve enough money to pay bills and decide whether to invest in equipment or software.

Monthly Accounting

  1. Balance the checkbook. This is the same process you use for your personal checkbook.
  2. Review your receivables aging and send out reminders to customers that are past-due. Familiarity with this report will help you make decisions at the end of the year if you need to write off a loss.
  3. Examine the status of your inventory, including reordering and identifying slow movers. It’s easy to make inventory adjustments if you keep a monthly review of stock.
  4. Process payroll, including payroll tax requirements. Payroll is a popular choice for outsourced accounting, because there are many requirements for tax payments and withholding.
  5. Evaluate actual profit and loss versus budget and versus the same month in prior years to determine where you may be spending too much or not enough.
  6. Examine month-end balance sheets versus the prior period, to get a clear assessment of how you are doing with managing assets and liabilities.

Quarterly Accounting

  1. Create your Profit and Loss estimate to see how much money your business is      making and evaluate your net assets.
  2. Examine quarterly payroll reports and make payments to the IRS. If you are investing in outsourced accounting, your accountant will prepare the necessary returns and file them.
  3. .Make quarterly sales tax payments. Again, you may be using outsourced accounting, which is a good way to ensure that you are accurately paying your state’s tax payments.
  4. Determine your estimated income tax and make the payments using your P&L to calculate the appropriate tax amount.

Annual Accounting

  1. Make decisions about past-due receivables. You’ll be glad that you reviewed these each month and issued reminders. You will decide whether to write off amounts or send them to collections.
  2. Evaluate your inventory and make note of any unsellable inventory for a deduction on your tax return.
  3. Create IRS W-2 forms and 1099-MISC forms by January 31, including distributing them to your employees and contractors.
  4. Complete your full-year financial reports and tax return. If you have not done it in other areas, this is an ideal time to hire outsourced accounting. As your business grows, you tax return typically becomes more complicated and you will be glad to secure the expertise of an accounting specialist.

At AccuBiz, you benefit from the experience of Bert Doerhoff, CPA. Whether you are considering outsourced accounting for a small portion of your financial management, or if you need an expert that can handle all the detailed areas of accounting and advice you on broader topics of financial management, AccuBiz can provide a wide range of tax and accounting services. Call us today for an initial meeting to discuss the unique needs of your business.