The traditional method of accounting dates to 1495 and was designed by an Italian monk. It is still the basis of most accounting programs but no longer suits today’s entrepreneurs. Below are why you should no longer work with the traditional accounting method.
Accounting is about your business
You want to know where you stand. Because this is the way you can make the right choice and know you have enough money in the account to pay taxes. Traditional accounting is not typically for entrepreneurs but accountants and unclear reporting.
The tax authorities don’t ask that much at all
You pay your taxes neatly, and the tax authorities want to know what you base your calculation on. The Tax and Customs Administration does not ask much. Simplified accounting is sufficient for companies with a turnover of up to $12 million annually (i.e., 85% of all companies). For this, you only need to register how much something costs and what part of that was the VAT. Add a copy of the invoice, and you’re finished. The Tax and Customs Administration does not ask for more. Yet, with the traditional accounting system, the accounting records of the smallest company are kept as if they were a multinational corporation. That is an unnecessary waste of time and money and certainly does not make it more transparent.
You don’t want to look in the ass of a cow
Entrepreneurship is about the here and now, not last month and certainly not last year. Yet traditional accounting systems are entirely focused on the past. Financial statements are made months after the year-end close. Sometimes even longer than a year after the year-end closing. It makes them completely worthless.
Few entrepreneurs know that the tax authorities only work with 12 cost items for the tax return, while the traditional accounting system works with a standard of more than 800 cost items. What happens to all other cost items? These will be merged into the 12 of the Tax Authorities. So splitting is only reasonable if it gives your insight; otherwise, it’s wasted effort, time, and money.
The Chamber of Commerce has standard annual accounts
Traditional accountants quickly turn the yearly reports into a book with more than 20 pages. That looks very important but has no value at all, provided you enjoy reading it repeatedly. The Chamber of Commerce has a standard of the figures you must deposit. No more and no less. So, anything you do beyond the norm is a waste of time and money.
Do it once, do it right
It is an old slogan but has not yet penetrated the traditional accounting system. In the conventional accounting system, entries are continuously added throughout the year. All corrections happen at the end of the year, such as processing depreciation, private use, and converting the profit to reserves. It’s all a duplication of an outdated method. Another disadvantage is that accounting is always behind the times and does not accurately represent your company during the year.
Computers are there to automate
The traditional accounting method is challenging to automate, mainly because conventional accountants don’t want to because they want to protect their job and status. But computers are not stupid and have long been able to work around all the drawbacks of traditional bookkeeping. Smarter, faster, better, and more reliable than an accountant can do. So that your accounting meets all legal requirements, and you understand what it is about and with a minimum of work, you must do.
So nowadays, accounting can and should be done differently. With the new accounting method, ‘Entrepreneur Oriented Accounting,’ you as an entrepreneur are once again central. With this, you meet the requirements of the Tax Authorities, you understand your accounting yourself, you enter everything correctly and definitively in one go, and the reports provide you with real-time information. And all reports, even the annual report, come from the accounting system at the touch of a button. Jortt invented Entrepreneur Focused Accounting which is suitable for all companies, from freelancers to general partnerships, BV, and partnerships with a turnover of up to $12 million annually.About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud platform where their QuickBooks™️ file, critical financial documents, and back-office tools are hosted in an efficient SSO environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.