Ngan's sacred corner

Hi blog!

It has been such a long time since I blogged. Many things have happened. I did not make it through the visa lottery and now come back to school for Master of Accountancy at U of M. I have just accepted a part-time job offer as an Accounting Consultant for a small business. The role is challenging but will be very exciting for me.

I like to describe my role as the Controller & CFO's roles. The business owners have 3 separate businesses under the same book. He is planning to grow another business and want to separate the books for the 3 business. He also needs help to putting his finance in order so that he can raise funds from banks or investors.

I have initially thought my first step would be to sit down with the owner and the business strategy to understand the business model of each of the 3 businesses, understand their plan to grow for each of these businesses and their plan for their new business. I would then sit down with the bookkeeper and each person in the office to understand the nature of transaction, how transaction is recorded and how the business is operating.

Yesterday, I came to Larry Kallio, my professor and the director of the MAcc program for advice. He really opened my eyes and guided my thinking to somewhere I never thought about: setting up the GL code to capture every transaction in the correct category. That is the only way I can build a process that helps me with good data to analyze in the future.

" You need to build a process that will run by itself without you." 

I think it is really my job here and why they hired me. How am I going to establish an accounting process and procedures so that when there is turnover, people know how to pick up the task and just roll with it.

How am I going to set up a system so that in the future, I can easily pull data and drill down the way I want to perform my analysis. My job is to set up the system and perform data analysis to provide insight into the business' operation and opportunities for cost cutting or revenue growth. 

I have done a little bit research about setting up an accounting system based on my professor guidance and I want to capture it here for my future reference:

1. Pick an accounting method: Cash or Accrual basis
2. Choose a method to record transaction: hard-ware or soft-ware? which accounting system? (Quickbooks? Intuit? etc.)
3. Set up "Charts of Account"

• Your chart of accounts in an accounting system, designed specifically for your company to help track and report your income and expenses
•  QuickBooks Pro and some other software programs include a "wizard" that will customize a "chart of accounts" for your business.
  
• Set up your categories: 
• 1. Assets - everything your company owns (or is owed), including current assets. fixed assets, accounts receivable, inventory. In this category, also include an account for accumulated depreciation for each asset.
• 2. Liabilities – everything your company owes (or may owe). Current liabilities include your accounts payable and taxes (both payroll and sales). Long-term liabilities might include a mortgage or some other long-term debt account.
• 3. Owner’s equity – your business investments. This account should include common stock and preferred stock, in the case that you have investors at some point.
• 4. Revenue – Sales revenue is your primary source of income. You may also choose to include accounts for sales discounts or returns. It’s also a good idea to create an interest income account for any income earned on company investments. Consider, too, the cost of goods and other related sales costs under your revenue account.
• 5. Expenses – For expenses, you may want to start with the Schedule C IRS Form. While the point of your chart of accounts isn’t merely to help you to file your taxes, this tax form is still a good starting point to build on for creating your expense account. This form includes such things as advertising, contract labor, employee benefits, legal and professional services, repairs, and more.
• http://earlygrowthfinancialservices.com/creating-your-chart-of-accounts-for-your-startup/