How to Prepare to Switch From Manual to Computerized Accounting

by Drew Nelson; Updated September 26, 2017
Person using adding machine

Switching from manual to computerized accounting is a step-by-step process that can be accomplished easily and efficiently. If it is the end of the fiscal year, you can start with the beginning of the new fiscal year. There is no need to input data from prior periods, except for the year-end financial statements. If it is not the end of the year, you need to decide if you want to wait until the end of the year or input into the system all of the detailed data up to that point in the year.

Research and decide on the computer equipment that you will need for your computerized accounting system. Most PCs today have the capacity for an off-the-shelf accounting package for a small business. Make sure that your computer has a hard drive with several gigabytes of storage space. As time goes on your computerized records will grow and you want the computer to last a few years. You also will want word processing and spreadsheet programs, as well as Internet and email capability.

Set up your computer equipment and establish your Internet connection. This step is important because all accounting software packages will have online help available if you run into a problem. Also as part of your computer setup establish a means of backing up your files. You should backup your data every day or even more often when you work on something critical. Files can be easily backed up on portable drives. It is important to realize that an accounting system is a database from which information is retrieved when needed.

Research and decide which accounting software package is best for your business. Most small companies do fine with an out-of-the-box software package, such as QuickBooks or Peachtree.

Set up the software package by following the built-in menus. Establish a chart of accounts for your general ledger. Set up your bank accounts and add any necessary information about your vendors and your customers.

Enter the detailed transaction data necessary to bring the computerized books up to date. You will need to enter the end-of-year financial statements from the prior year as your beginning balances for the current year. Then key in the detailed transaction data for each month of the current year until you are up to date. If it is the end of the year, simply set up the beginning balances for the new year and work forward, entering accounting data as transactions and events occur. You are now operating on a computerized accounting system.

Decide if you want prior year financial statements entered into the system. In order to provide history in the computerized records, you can add the financial statements from prior years. You can do this monthly, quarterly or annually going back several years. There is no need to add the detailed transaction data to the history but there should be a trail going back to the manual records.

About the Author

Drew Nelson is a Certified Public Accountant with over 20 years experience. As a professional he has written dozens of reports, presentations and manuals. His articles appear on various websites, covering finance, economics, politics and health topics.

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