Become Your Own Accountant

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How to Become Your Own Accountant

If you own your own business or you do some contracting work on the side, then it's important to keep track of all documents related to your business. Many new businesses want to manage their own finances themselves, instead of hiring someone to do it. This allows you to keep in intimate contact with the financial health of your company but takes a significant amount of time. Even if you hire a Certified Public Accountant (CPA) to do your taxes, you will need to keep meticulous records throughout the year. Becoming your own accounting clerk, or bookkeeper, requires understanding the principles of bookkeeping, choosing a system or software and then being meticulous in your paperwork. This article will tell you how to become your own accounting clerk.


Steps

  1. Understand the skills that educated accounting clerks possess. Take accounting classes if they are available to you through a Lifelong Learning course or at the local library. The following are also skills that are acquired through an accounting clerk education:
    • Become an expert in computer skills, especially spreadsheets. Accounting clerks have an above-average understanding of computers and calculators. Being able to manage simple finances through spreadsheets is an excellent talent.
    • Be good at math or have an appreciation for numbers. People who work with numbers daily have an interest and appreciation for how numbers work together. You should have a college-level ability at math, especially algebra, to be an accounting clerk.
    • Study accounting terms and principles. Visit the Internal Revenue Service (IRS) or your government's tax site to study the terms that are applied to accounting. These can include an income statement, statement of tax flows, balance sheet, retained earnings sheet, assets, expenses, dividends, allocation and valuation.
    • Understand double-entry bookkeeping. This is a system used throughout the world, and especially in America. In this system, everything has a credit or a debit. For example, this means that if you are credited money for selling a product in 1 electronic ledger, you subtract a debit from your inventory ledger. At the end of the month, everything balances, because you have a credit and a debit in the same amount in your system.
  2. Buy and learn a type of accounting software. Popular programs include Peach Tree, Quicken or Quickbooks. Take a course on it or follow the instructions carefully in the tutorials.
    • These programs help you to balance your credits, debits, do payroll and do monthly balances. They can be used to help you do your own business taxes at the end of the year, or they can help your CPA to do your taxes.
    • You can also do your bookkeeping manually with ledger books or excel spreadsheets. With the availability of very good accounting software, this practice has become uncommon. It is easier to do double-entry bookkeeping with a software program.
  3. Develop a meticulous organization system that works for you. As well as keeping a software-based accounting system, you will need to save all documents and make copies of checks or invoices that go out, so that you can refer to them if you are audited in the future. You will also need to store all expense receipts.
    • Use filing systems, binders or folders to ensure that you have easy access to the information, in case your accounts don't match up. Label them extensively.
  4. Do regular accounting practices for your employees. These things must be managed on a daily, bi-weekly or monthly basis. You will need to learn to do the following accounting processes:
    • Process W-2 forms with the IRS. You must ask each new employee to fill out a W-2 so that you know how much of their salary to withhold for taxes. Then, you must submit this to the IRS.
    • Do monthly or bi-monthly payroll. You should be able to send out checks or do direct debits for payroll, while withholding taxes and calculating vacation and sick pay. You should also keep track of your employee's benefits, such as health insurance or worker's compensation. Most accounting software programs help you to do this.
    • Pay accounts payable on a bi-weekly basis. Each incoming bill should have a notice of when it is due. Process it according to that time. Most accounting software also helps you to do this.
    • Manage your cash flow throughout the month. You should be able to track all assets and liabilities. Run monthly reports so that you know if you are operating at a loss or a gain.
    • Keep track of all tax deadlines. Many businesses file quarterly or semi-annual taxes. If you don't send the taxes to the IRS yourself, you should be able to provide all the necessary documents to your tax preparer.
  5. Compare your monthly reports and financial reports regularly. Seek the advice of an accountant, if your accounts don't line up regularly or if you have a large discrepancy. It is a good plan to have someone else in your company, or someone you have hired, double check your accounting.

Tips

  • If you find yourself in need of an accounting clerk or bookkeeper, then you can hire a freelance bookkeeper, instead of hiring 1 full-time. If you only require someone to keep track of your finances for a short amount of time, this may be preferable to hiring a full-charge bookkeeper.

Things You'll Need

  • College-level math
  • Accounting software
  • Organizational system
  • Certified Public Accountant
  • Payroll
  • W-2 applications
  • Spreadsheets
  • Filing systems
  • Labels

 

Sources and Citations

Article provided by wikiHow. All content on wikiHow can be shared under a Creative Commons license.
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