Peter Pan said, “Even though you want to try to, never grow up.” This may be good advice to maintain a youthful perspective on life, but it’s not smart for a small business looking to grow.

When you are a solopreneur or start-up business, basic accounting processes may work for a while, but rather quickly, you reach the point of needing a more sophisticated approach that will enhance business decisions for the long term.

Peter Pan Syndrome Has No Place in Business Accounting

Most of our clients had some sort of accounting process in place that they outgrew. They may have had an office manager (or other non-accounting person) doing their books or a DIY system. Some even outsourced their accounting to a bookkeeping firm. The biggest reason clients come to Juna is our highly sophisticated accounting system, processes and experts. We like to call it, “Grown-Up Accounting.”

What Does Grown-Up Accounting Mean?

While artificial intelligence can make bookkeeping easier, you also need a professional to know where the data goes. After all, garbage in, garbage out. It’s also crucial to have someone who can prepare reports in a meaningful way to make informed business decisions. Companies that want to get to their next level need more than basic bookkeeping. (Tip: read our blog on avoiding common mistakes in QuickBooks.)

Top Reasons for Transitioning to Grown-Up Accounting

Here are the top reasons clients come to Juna for Grown-Up Accounting:

1. 1. 1. 1. A financial statement audit – The books not only have to be clean, they have to be prepared in accordance with Generally Accepted Accounting Principles (GAAP) to get through an audit. A professional accountant should have a solid understanding of the nuances of GAAP (including the new revenue recognition and lease accounting standards) and prepare your books so they’re ready for the auditors. 
         2. Switching from cash basis to accrual basis – As this story in Forbes notes, “The key difference between the two approaches is timing.” Think of cash basis as monitoring cash flow, which can paint an incomplete picture, and accrual basis as accounting for income when it’s earned. In fact, accrual is required for GAAP, making the financial statements more meaningful because you’re reporting revenue in the period that it’s earned and expenses in the period they’re incurred, rather than just when the cash is received or paid.
         3. Growing your company, raising equity capital – Most investors will require that your books be prepared on an accrual basis and may require you to have an audit, which requires GAAP financials. You’ll also have more credibility with investors if you have a more sophisticated system.
         4. Borrowing money – You aren’t “bankable” unless you have solid financials. Banks not only require accurate financial reports when you apply for the loan; they also typically require that you report your financials on a regular basis and meet specific loan covenants such as meeting certain ratios, including the cash flow coverage ratio. 
         5. Preparing for an exit – Anyone interested in buying your company will scrutinize everything, including – and especially – your books. The financial statements better be squeaky clean or you may have an adjustment to the purchase price, which it’s not usually in the seller’s favor.
         6. A valuation of your company – Valuations are required for a number of reasons including mergers and acquisitions,  granting options, and succession planning. A business that doesn’t have meaningful financial data can’t be accurately valued. Valuation models are only as good as the information going into it. (Garbage in, garbage out….again.)
         7. Better understanding – If you simply need a better understanding of what’s going on in your business financially, you need a professional – we’re there for you. You might question if you’re making the right decisions on pricing, hiring and more.  These are all things that a clean set of books + meaningful financial reports + a professional accountant can help answer for you.
         8. Business complexity – Let’s say you have different lines of business, multiple locations or foreign operations and deal with multi-currencies. Even if you have clean books, you may benefit from more sophisticated reporting and support. For example, if you have multiple locations, knowledgeable professionals with a good accounting system would break out your revenue and expenses applicable to each division to give you the information to better manage your company. Some of our clients graduate from QuickBooks to an accounting software system like Netsuite that can handle these complexities.
         9. Budgeting – As Yogi Berra quipped, “If you don’t know where you’re going, you’ll end up someplace else.” A budget allows you to set goals and monitor your progress towards those goals. An experienced accounting professional can create budgets and budget-to-actual results on a regular basis.
         10. Forecasting/planning – Financial statements report the past. Long term forecasts try to predict the future. A forecast model is typically required when raising capital. In order to have forecasts that are meaningful, you need good, solid, accurate data as a starting point and a professional who can help you build a reliable model. 

The Benefits of Grown-Up Accounting

Even if you don’t plan to raise capital, take out a loan or exit in the near future, it’s wise to have books that are well-prepared and updated. And, a grown-up accounting system will give you an accurate record of your business’ financial history and help you plan for the future.

If you think it’s not worth the investment in grown-up accounting now, keep in mind that it may cost more to have the books cleaned up than it would have been to have them done professionally in the first place. 

How Juna Can Help You Level Up Your Accounting

If your business requires advanced accounting systems, Juna is here to assist. We offer comprehensive accounting services in QuickBooks, and if you outgrow QuickBooks, we offer Netsuite conversion services. While Peter Pan may have pledged never to grow up, we at Juna encourage businesses to do just the opposite. Level up your accounting practices with us and witness your business thrive.