What accounting should be doing for you

There are four basic things that accounting does, and does well. First, accounting is the language that you speak to outside parties in, whether that’s people looking at buying a company, the IRS or other tax collection entity, shareholders or vendors, customers, or just other people. This is the language of business. There are a lot of Generally Accepted Accounting Procedures, GAAPs, but so far as the math goes, it’s done in the normal way of math, and there’s not much wiggle room, or at least that is what you may believe. There are actually several ways to squeeze the numbers and some of those ways work better for presenting information to different people.

For example, the management team doesn’t really care how much accumulated depreciation you have on Equipment X, but the IRS sure does. Management doesn’t care if you take a 179 deduction on the equipment, or if you are using the double-declining balance method. But the IRS lives for that stuff. So, the first thing that accounting should be doing for you, is presenting you with just the amount of information that you need, without throwing a bunch of stuff at you that you neither need nor want to know.

Second, there is a whole arm of accounting dedicated to payroll. Payroll has its own tax laws, its own tax filing requirements, and its own workspace. Even if you are using accounting software like QuickBooks Online, there is separate software for payroll because payroll is so complex.

Third, accounting is the backbone of the company, ensuring income coming in from the appropriate sources, and that bills are being paid on time, as well as the purchase of the items necessary to run the business.

Fourth, accounting should be timely. You have deadlines, both internal and external, and accounting should be cognizant of that. What good is accounting doing for you if you can’t ask for an assessment of whether or not a thing is good for your company, and get a reasonably timely answer, then why do you even have the type of accounting that you have in the first place?