How to Start an Accounting Department for Your Business
Updated: Jun 21
One of the first things you should do, when starting a new business, is to get a framework laid out for your accounting department. This doesn't mean you need to hire a bunch of employees yet, but you definitely should contract with an Accountant to help you set up your accounting processes.
As a warning, I have seen dozens of businesses over the years, end up in financial and/or tax trouble simply because they didn't have the accounting in place at the beginning of their business. The majority waited until it was too late and either had to close down, or battle back by fixing their financial situation. If they did make it, the accounting restatement ended up costing the business a ton more in expenses versus having the accounting correct from the onset.
Your first step is to hire someone like myself to build the foundational principles of your accounting operations. You want this person to be able to understand the overarching goal of the business and how the business flows. From there, the Accountant can construct how the accounting platform will be built.
Next is to open a business bank account. You will want to apply for a business credit card also through your bank so you have access to credit and can start building credit for your business.
From here, you and your Accountant will select the best type of accounting software to use. In my opinion, QuickBooks Online is the superior product for small to mid size businesses.
Once your Accountant has set up the initial information in QuickBooks, they will set up your Chart of Accounts which is basically the way your specific business will break out income, expenses, and all Balance Sheet accounts.
Now that your Chart of Accounts is built, the Accountant will set up all connections between QuickBooks and your bank, credit cards, and loans so that transactions will get imported in to the software directly from these institutions.
You now have the basic framework of an accounting department set up for your business.
This is obviously a basic example of how to set up your accounting, but there are many more processes that need to be built from here;
-Month end close and financial reporting and analysis
-Financing for growth
And a multitude of other areas that will need to be considered for your specific business's accounting department.
Before I go, I wanted to give another warning. Bookkeepers are people that have some experience in basic accounting, but if you are leaving your entire accounting to a bookkeeper, you are running a high risk of having issues with your accounting which can lead to the disasters I spoke of above.
Point being, make sure to hire a qualified and talented Accountant that will be the cornerstone of your company's finances. Talented because you not only need someone to do the actual work, but also because you need someone that is accounting wise and can coach you through a part of your business that deserves utmost respect and attention.
Blue Collar CFO