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Phase II - How to record transactions effectively

Phase II to a successful accounting system is for your accounting team (Team) to know how to record your business's transactions effectively.  A transaction is simply a business event: a sale, a purchase, a customer payment, a vendor payment, payroll.  Your accounting team needs to identify and record every transaction that takes place in your business if you want to receive accurate reports to make good management decisions.  Capturing every transaction can sound overwhelming.  But it really isn't, if your Team records transactions effectively.  By effectively, I mean:

  • Teach your Team to think about the operating cycles in your business.  By cycle, I mean sales, deposits, checks written, credit card purchases, and payroll.  Knowing this will help your Team to look for the transactions occurring in each cycle.  Reduces the chance of missing transactions.

  • Make sure all persons involved in each operating cycle knows to communicate to your accounting Team when transactions occur, whether through written records, or verbally.  Reduces the chance for missing transactions.

  • Teach your staff when it is important to record a transaction in the proper QuickBooks screen.  For example, you could record a summary of sales for each day in a memorized journal entry. It would be better to record the summary in either a memorized invoice or a Cash sale screen.  If you record the summary as an invoice or cash sale, QuickBooks will provide graphs of your sales.  But those graphs are not populated if your Team records sales in a memorized transaction.

  • Set up templates in QuickBooks with instructions right on the input screen, to reduce the time to record recurring transactions. 
  • Teach your Team to look for missing transactions.  Reduces the chance for missing transactions.

  • Teach your team to use proof procedures to catch incorrect entry or missed transactions.  Example: confirm that payroll recorded in QuickBooks ties to the payroll records from your  payroll service after recording each payroll.

  • Advise your Team of any tax reporting requirements, so they record and summarize those transactions for the tax returns.

  • Advise your team to set up vendors properly so they or we can prepare Form 1099 using QuickBooks.

  • Advise your Team how and when to file and store documents supporting account balances. This will be useful if management wants to analyze data, or if your business is selected for audit by a governmental agency.