How to simplify your chart of accounts with Business Central

How to simplify your chart of accounts with Business Central

Accounting is a complex job, which is why businesses need qualified accountants to prepare their tax returns and other financial records. And because dealing with stringent regulations and compliance standards are also complex, businesses must make sure there is rarely any room for error when recording business transactions.

That’s why it’s absolutely critical for any business to use an accounting system that a) accountants are familiar with, b) has an excellent track record for compliance, and c) leverages technology to improve user experience and security. For our South Miami clients, the award-winning app Dynamics 365 Business Central meets all these requirements.

Related article: The benefits of cloud-based accounting systems

Business Central simplifies the entire accounting process through automation and its straightforward design. Its interface is uncluttered and everything is labeled properly, so that there can be no confusion as to the purpose of certain elements such as text boxes and dropdown menus. It also features account cards where you define how each account is handled by the system.

Card setup is simple, as requested information is orderly arranged from top to bottom, allowing users to fill out data in one page. Once everything is filled out, you only need to input a value and the system will automatically send that information out to where it needs to go. No need to drag cards to other locations and fill out multiple action sheets for the same transaction. Everything will automatically be posted onto your charts of accounts as necessary.

What is the chart of accounts?

The chart of accounts (CoA) is the list of general ledger accounts where expenditures, revenue, assets, and liabilities are all well-organized. It is the backbone of all business management systems, and gives the business’s leaders an overall picture of the company’s financial health.

To get started, simply type “Chart of accounts” onto the Business Central search box, and click on the first link in the search results. Next, click on New to pull up a blank G/L Account Card template that you can fill out with the necessary account information.

Related article: Managing the chart of accounts on Business Central

Account cards

Account cards help the system determine how to treat each account, so be diligent with filling it out. Simplifying your chart of accounts requires thorough preparation of account cards before regular use. Fortunately, Business Central’s design is neat and coherent, making it easy for any accountant to build up a compliant system of recording finances.

Fill out your account card with the correct number and name — you will rely heavily on these labels for future transactions. Select the correct Income/Balance, Debit/Credit, and Account Type settings, which will tell the system how to post the values entered onto the card.

For instance, setting the account card to Credit will make it a credit account, and the figures entered onto the card will be reflected as a debit entry in related accounts and as a credit entry in others (these are defined in the posting setup). This will simplify your balancing and reconciliation at the end of the accounting period.

Related article: How Business Central’s Dimensions can simplify your charts of accounts

Posting setup

Lastly, configure your posting setups properly so the system knows where to post the values entered onto the card. You can specify whether the card is used for sales or purchases, its general business posting groups, its general product posting groups, and its posting groups for tax purposes (VAT business posting group and VAT product posting group).

Business Central takes ease of use further by integrating tax computing capabilities for virtually anywhere your company does business. Under both VAT business posting group and VAT product posting group, simply choose whether the account card is intended for domestic customers and vendors, customers and vendors in EU, or other customers and vendors (non-EU).

Get an enterprise resource planning (ERP) and accounting software that does all the heavy lifting for you. Dynamics 365 Business Central is the market-leading ERP system that can take your business to the next level. Contact us to ask about subscriptions and support.

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