Are you ready to make a move to a different accounting software program? Or maybe you’re getting an accounting program in place for the very first time. Here’s some help for making a smooth transition.
• Pick an accounting software program. If you are a small shop – less than $750,000 in sales – use QuickBooks. I would hold off on any industry specific software because QuickBooks is a rock-solid accounting program for that size of operation.
• For larger shops, QuickBooks has limitations. It doesn’t have a dispatching module or a good way to keep customer history. So consider an “add on” program that does those things and can interface with QuickBooks.
• Get to the cloud. Consider a program that connects via the Internet. You won’t need servers. However, understand that you are trusting your data to the Web. Plan to regularly download and store your company information on a drive and keep it in a fire proof safe.
• Pick a date for your transition. This is the day on which you enter all data into your new accounting program and stop entering data into the old program. Pick the beginning of a year or a quarter.
• Follow the software guidelines. Honor the software and the way it was designed. You’ll have more success if you learn and follow the intentions of the software developers as you proceed.
• Back up the old files. Create the option of restoring to where you were before you started the conversion in case something goes awry.
• Assemble the data you will need for the beginning balances. There will be verifiable evidence such as bank and credit card statements, loan documents, invoices for asset purchases and tax returns.
• Create the new file. Always create the working file of a new program on the last day of the previous year, even if your transition date is in the middle of a year. Enter ending balances in the balance sheet accounts as of the last day of the last year. These balances become the beginning balances for the current year.
• Update and upgrade your chart of accounts. Delete or inactivate accounts that you don’t want or need.
• Enter customers and vendors. Unless you are certain the data will come through in a useable fashion, don’t bring the dollar transactions with the vendor and customer files. Just bring over the empty accounts to be populated moving forward.
• Create accounts payable and receivable. As of the last day of last year, enter any invoices that were created in the prior year but not paid until the current year. Do this for vendors and customers to create accounts payable and accounts receivable.
• Get going! Enter data from the beginning of the current year and get caught up as soon as possible.
• Consider using Paychex or ADP for payroll entry. Payroll is so much easier to enter as a journal entry than as an integrated process in accounting.
• Reconcile the bank statements, month by month. Use the process in your accounting system for your bank reconciliations. While you might make a mistake in data entry, if you get the cash accounts right, you have a good chunk of the data entry right.
• Involve your CPA or tax preparer in the process. The bottom line is the balances have to be right. Make sure your certified public accountant signs off on your plan and your implementation.
• If you make a mistake, learn from it. It’s a bummer to have to start over. Go ahead and cry or throw a fit, if you need to, but keep going.
Ellen Rohr is an author and business consultant who offers systems for getting focused and organized, making money and having fun in business. Her books include “Where Did the Money Go?” and “The Bare Bones Weekend Biz Plan.” She can be reached at
ellen@barebonesbiz.com.
