How Non-Accounting Professionals Can Establish a Bookkeeping System for a Business Operating for 4 Years
The company has been operating for 4-5 years without ever having a professional accountant, with only simple income and expense records, some of which were burned. A newly hired non-accounting employee began setting up books in September 2023, needing to keep separate records for multiple business entities, but lacking opening balances and asset cost information. This article analyzes the issues and provides actionable steps.
Hello everyone, first of all, I am very happy to be here. You may see my posts on other accounting forums, please bear with me. I really need as much help as possible.
Let me introduce myself first: I am ___, I am not an accountant, but I took some accounting courses during college. Anyway, here is my dilemma: I was hired by a company that has been operating for 4-5 years. They have never had an accountant or any similar position in the past. All they had was a simple list of income and expenses, nothing more. And many of those records have been lost because some documents were burned. Now, they have agreed that I start building the accounting books from the point I was hired, which is September of this year, because it would be difficult to reconcile all the historical records. My question is: I really don't know where to start. What I am doing now is just collecting all the records I can get, such as understanding the costs of this and that, and then classifying them as assets and so on.
To give you an overview of the company:
- XYZ Company is the parent company, and it has 3 businesses under it:
- ABC Company - wholesale and retail of bags, shoes, watches, etc.
- DEF Company - restaurant.
- COM 1, COM 2, COM 3, COM 4 - all engaged in the sale of doors and windows.
The specific business relationships are as follows:
- COM 1: Imports supplies from China; uses these supplies to manufacture doors and windows; sells both the door and window manufacturing supplies from China and the finished doors and windows.
- COM 2 and COM 3: Request/purchase supplies needed to manufacture doors and windows from COM 1; use these supplies to manufacture doors and windows; sell both the supplies from COM 1 and the finished doors and windows.
- COM 4: Does not have its own manufacturing capability; they obtain the doors and windows requested by buyers from COM 1 or COM 2.
My question is:
- Where should I start? What records/costs/prices should I obtain? Because right now I am trying to find out the cost/price of all the items the company already had before I joined, such as computers, furniture and fixtures, etc.
- They want me to keep separate books for each business, so how should I start? What should be my journal entries for the opening balances? Because honestly, I don't know. Before I joined, they already had usable supplies/inventory, had already incurred expenses, and had made some sales.
By the way, you might say just resign, or tell them I can't do it and directly hire a professional accountant. But I was hired for a reason - maybe trust, their financial capability, or whatever - and I am willing to learn and be able to do this for them. Thank you in advance to all who are willing to help me.