Revamping Your Chart of Accounts
By Wiss Associate
In last month’s post, we discussed what your company’s chart of accounts should entail and its prominence to the accounting and financial side of your organization. Now let’s see why and when you should reorganize the information that will make up your chart of accounts.
Why to Take Action
Your spotless and well-organized accounts will help your company prepare your books for the following activities:
- Working with your outside accounting advisors for quick and accurate tax preparation
- Forecasting future income and expenditures to avoid surprises
- Applying for and securing bank loans or funding from outside investors
- Better understanding your cash flow and ability to hire staff and take on capital expenses
When to Take Action
Revamping your chart of accounts might seem like more of a challenge than it will end up being, so let’s outline a few ideal windows of opportunity to help include greater accounting system clarity for your business. If you need a push, here are a few milestone events that might serve as your inspiration to get started:
When converting to a new accounting system. At this point, your company will already be going through significant changes and you will already have plans to make the transition as smooth and painless as possible. To assist you in this process, an exceptional strategy would be to tidy up your accounts in order to eliminate all possible disruptions and help the company focus on the transition itself.
After a year-end audit, review or compilation. During these periods, your accounting staff are already crunching numbers and assessing the vulnerabilities in your company’s accounting system. It’s a no-brainer that reorganizing information can be utilized here.
While preparing for tax season. Start the year off on the right foot by cleaning up your accounts a little earlier than you normally would. The addition of a neat chart of accounts will go far toward making this your most effortless tax prep yet.
Before seeking outside funding sources. Lenders care about the contents of your chart of accounts before anything else. Whether you’re going for a bank loan, a partnership arrangement or silent investors, they’ll want to examine your books – and you don’t want them to be confused or misled by disorganization.
Any time is a good time! Get you chart of accounts organized and you’ll never regret whatever temporary hassle might be involved.
Using a fresh set of eyes on your numbers never hurts either. Getting outside assistance from your accounting advisors can bring in new strategies for enhancing the performance of your chart of accounts. But don’t wait for inspiration or the perfect time. Take action now.
To read more about why an organized chart of accounts is important, check out our previous blog here.