Accounting Unplugged

SOPA Blackout

Posted in 0. Rants by admin on the January 17th, 2012

I am participating in the SOPA Blackout to protest internet censorship.

What a great impact we had today, please continue to support your representatives in voting NO on PIPA and SOPA.

Accountability is not a Luxury, it’s a Crucial Responsibility

Posted in 0. Rants by Erin Lawlor on the August 8th, 2009

The act of hiring an accountant does not relieve an employer of the responsibility of safeguarding its resources and interests.

Similarly, that act of electing a representative does not relieve a group of the responsibility of safeguarding its resources and interests.

Whether we’re talking about money or power, when the employer fails to oversee and demand accountability, money/power will eventually be used to benefit the one who is controlling it rather than the one(s) to whom it belongs.

The most dangerous thing for any person or group is unchecked access to resources and power.  That sort of power makes them into targets for temptations and pressures that cannot always be risen above.  How much easier is it to tempt or coerce one person or even 60 people than it is to tempt or coerce multitudes of people?

When we send representatives off with a blank check and we don’t demand accountability we are in essence sending them off to the destruction of themselves as well as the destruction of those they represent.  The election process is neither frequent nor effective enough to ward off the pressures they are subjected to.

With regard to the political arena in the U.S. which is in an emergency state –

We must support our representatives and protect them from the pressures they face.  The quickest way to do this is for every person to demand full accountability of those they elect and hire.  We must demand it of our school boards, mayors, governors, congressmen, senators and President.  We must demand that they read and understand what they are signing and/or voting on before they do so.  And we must demand a full accounting of the reasons for their vote on a point by point basis for every issue in a bill – including ear marks.

If we fulfill our own responsibility in the process we will have a better outcome.  We will have laws and services that better reflect the interests of the people and perhaps most importantly, we will remove the power from those who seek to corrupt the process for their own profit.  The pressure of corruption can be very effective when it is exerted on an individual or on a small group but that pressure is too expensive and ineffective when it must be spread over great numbers.

Our representatives are only the custodians of our collective vote/power not the owners of it.  Demanding accountability from our representatives will do two crucial things.  First, it ensures that we retain ownership of our vote/power and second it supports our representatives by removing temptations and pressures.

Call or write your representatives.  Thank them for their service but also respectfully ask for accountability.  We see the difference we are making nearly every day now.  Keep up the good work!

© 2009-2010 Erin Lawlor

**disclaimer:  All information posted on this blog is from my own experience and training.  The guidelines I present are general and in my experience, standard practice.  I do not write with authority from any Accounting Standards Boards.

Understand Your Numbers

Posted in 0. Rants by Erin Lawlor on the March 28th, 2009

>>Accounting Overview

I just finished checking out yet another “accounting” program that promises to do all the heavy lifting and thinking for a business owner.  Those programs make me worry.

The process of setting up and maintaining your accounting is a crucial part of understanding whether your business can/might make money.  It worries me when software promises to automate away the importance of upfront planning and setup.

To illustrate the importance of being involved in the processes, take a moment to brainstorm about the numbers.  What will you charge for your product or service?  What will it cost you to purchase, manufacture and/or provide your products and services, what are the other costs of running a business? Examples of other costs include Rent, Office Supplies, Telephone and Maintenance.

See how easy that was? Those products and costs that you just brainstormed up are the start of your accounting books. You can always add accounts later as you encounter new things but you can see in the example below how functional our initial setup is.

Subtract the cost of your product from the price you will charge your customers.  That is your margin.  Now, add up all the “other” costs of doing business like rent, utilities, fuel and payroll and divide them by your margin.  That number is how many products you will have to sell to break even.

  • Product:  Shipping Container
  • Direct Cost of each container = $100
  • Sales Price for each Shipping Container:  $200
  • Margin:  $100
  • Other costs of business:  $2,500
  • Break-Even Point: $2,500/$100 = 25

If your product costs, your other costs of business and your sales prices don’t change, you will break even if you sell 25 container each month and you’ll have a profit of $100 for each container sold over 25.

The process of estimating the margin and break even point has established your budget numbers. You’ll use them to measure against your actual results. This is all crucial information and a crucial part of managing a business.

Now, you have established a plan.  You can dream about selling thousands of containers each month and raking in the money.  Caution!  I know I told you that you would have a profit of $100 per container sold over 25 but now you have to start watching both your predicted costs and the additional costs that come with higher volumes of products sales.  Some of your costs – such as payroll and storage will increase with your the number of sales.

My point here is this, don’t allow yourself to be lulled into a false sense of security by the promises of simple accounting software.  It is potentially very dangerous to avoid that first step of understanding your numbers and it is just as dangerous to allow your software to just process your information without paying close attention to the details.

Seek help in setting up your accounting but be involved in the setup process. Automated setups are not all evil, they can actually give you clues about costs you might not have thought about. For heavens sake, use software to help automate the accounting and bookkeeping process but stay involved. If you pay a person or service to take care of the process for you, at least make sure you set aside time to review the results as often as possible preferably at least once a week while you’re getting established but for sure do it at least once a month.

Automation can be a beautiful thing, I am not against business owners using simplified bookkeeping programs and services with one caveat.  Understand Your Numbers! Seriously, you don’t have to do the setups or bookkeeping yourself but you do need to pay attention.  If you don’t want to take the time to pay close attention to your numbers should you try to run a business?

© 2008-2010 Erin Lawlor

>>Accounting Overview

**disclaimer:  All information posted on this blog is from my own experience and training.  The guidelines I present are general and in my experience, standard practice.  I do not write with authority from any Accounting Standards Boards.