Category Archives: 2 Processes

Why make some entries each month instead of once a year?

Indeed, why would you? One could also ask, why make entries at all in each month and why not just do your accounting and bookkeeping once a year.

The answer to this question should depend on your need really. It’s about what information you’d like to have about your company’s performance regularly. Is it important to you to regularly monitor and have an overview of how your company is performing or is it okay to once a year calculate and add up all your income, your expenses and then see if you earned a profit or a loss. Even excluding some expenses or revenues from your regular accounting routines and just doing them once a year means you may end up with an unexpected result at period end. It is really up to you if you want it or not. Continue reading →

Consistency

It’s such a simple word, with a clear and simple meaning, and yet often neglected and outright ignored. Why is it so however, I have no idea.

Let me explain.

Consistency is by default presumed in your daily reporting and as such, it is assumed you would account similar transactions in a manner that is consistent from day to day, from period to period. It is also assumed that your accounting routines are similar from transaction to transaction, i.e. referencing documents, describing the entries within the accounting system, reading the subject matter of the transaction as opposed to what’s written on the document and giving all similar transactions the same accounting treatment. Continue reading →

Expenses on which you need to pay taxes

In your everyday accounting there are bound to be some expenses on which you need to pay taxes according to your local legislation. Be them taxes on special benefits or VAT on general purchases, it’s important nonetheless to have an overview of the amounts the tax should be calculated on.

If the tax is on special type of expenses, say canteen expenses you pay for your employees, do make sure those expenses are accounted on a separate account so you’d have clear and easy overview of the amount. Continue reading →

Settlements – why have them?

What does someone settle? Debts usually, right?

In everyday business you’d settle receivables with payables if you have them with the same party. There’s no real point in you paying the company B a certain sum and then the company B paying you effectively the same money back. It’s a wasted time, bank charges etc. Instead, agree on a settlement – settle both party’s balances and see where the net result ends up, who has to pay to who. Continue reading →

Dealing with stock count differences

Stock count differences occur, that’s part of the nature of the inventories and the procedure – to identify if any of the positions differ from the physical count.

It’s what you do with the results afterwards that matters. Continue reading →

Think about termination clauses when signing your contracts

The thing with bad contracts is that first off you should try and avoid signing them. That’s for one and should be quite obvious.

However, how do you assess a contract and whether it’s bad for business or not. Some are easy to detect and negotiate, but some may seem like reasonable demands at the beginning. Continue reading →

Accounting treatment for specific accounting entries

In your accounting you definitely have specific entries. Now don’t get me wrong, I know that every entry is specific since you use the account names and numbers in your company’s ledger, however I want to focus on those specific entries that you’ve determined for specific transactions, the structure of entries if you may (i.e. how you account for the cost of goods sold when you make a sale, does it happen with the same entry, do you account the cost once a month etc.) Continue reading →