SET-UP ACCOUNTING SYSTEMS AND CONTROLS

Setting up of accounting systems and controls is a necessity for both start-up businesses as well as established businesses.  As a start-up business, before you commence trading you will need an accounting system that will be appropriate to your particular circumstances, needs and skill set as well as having controls designed and implemented to streamline efficiencies and mitigate weaknesses in business associated with your industry or business structure.

Accounting systems includes a wide range of systems, everything from cloud-based or hardware-based bookkeeping software and payroll software to Excel spreadsheets to record breakdown details of more complex accounting records.

Setting up the accounting systems, especially if using cloud-based software (online software), and internal business controls have an enormous benefit for business owners if done correctly from the get-go. Online accounting software keeps small business owners connected to their bookkeeping records and their accountants. Data about your sales or fees earned and purchases can flow straight from your bank to your books so you don’t spend hours transcribing them.  If you have engaged your BAN accountant to keep your accounting records up to date monthly, you will be able to see your current financial position at any time.

Another benefit of setting-up the correct accounting system, and as important, is the system will be set-up in the “prescribed manner” required by the Income Tax Act, the Value Added Tax Act, the Companies Act and international financial reporting standards, meaning that the reports generated from the system will be legally compliant to submit income tax returns, VAT returns, employees tax returns and the correct basis on which to prepare other reports required in terms of legislation.

Setting up controls in a business entails a business review of administrative and other procedures to mitigate weaknesses and risk in operations, for example, employee fraud, procurement of stock to ensure healthy cash flows, and so on.

Established businesses needs change and they often outgrow their initial accounting set-up and are more exposed to operational risks as the business grows, necessitating a review of their internal administrative controls. Often, the importance of reviewing internal controls is left too late, especially by the time employee fraud is found, which by that stage is often on a large scale or when the business is forced to liquidate due to a negative liquidity ratio.