Many companies start their business using a manual accounting system. For most entrepreneurs, this route allows the business to start operating without requiring a large investment for a computerized accounting system. The costs of installing a computerized accounting system include purchasing the system, labor to install the system and training costs to learn the system. A manual system involves writing each transaction in an accounting notebook and calculating all numbers manually. Many times, a business recognizes a need to convert from the manual system to a computerized accounting system.
Install New System
The first step to convert from a manual accounting system to a computerized accounting system involves installing the accounting system onto the company’s computer. The business owner reviews different software packages to determine which meets his business needs and purchases that software. The owner downloads the software onto the computer where the accounting work will occur.
Finalize Data in Manual System
The second step to convert requires the business owner to finalize the data. Once the computerized system is loaded onto the computer, the owner needs to finalize all of the data contained in the manual system. The owner ensures that all transactions appear in the accounting records and that all calculations appear correct. She may choose to hire an accounting firm to audit the manual financial records.
Transfer Balances to New System
With final account numbers recorded in the manual system, the owner can transfer the ending balances to the computerized system. The owner sets up each account in the computerized system by entering an account name, the type of account and the beginning balance. After entering each balance, the owner needs to compare the balances to the manual system balances to verify that all data is entered in the system accurately.
Run Parallel Systems
The fourth step requires the owner to use both the manual system and the computerized system for a temporary period of time. This allows the owner to ensure that the new system operates as expected.
Discontinue Manual System
At the end of the trial period, the owner discontinues the manual system. The owner needs to focus on using the computerized accounting system. All of the records from the manual system can be packed up and stored.