Setting up your accounting department as a small business accountant

I was pleasantly surprised to know how daunting it is to set up accounting department when I first became head of accounting and finance department of a small business. Setting up your accounting department as a small business accountant does not have to be very difficult if the right tools and information are at our disposal.

I would not have struggled the way I did if only I had the amount of information and tools at my disposal now back then. I was filled with this mixed feeling of fear and excitement when I received my offer letter to be one of the heads of accounting department of a start up company.


Setting up your accounting department as a small business accountantIf you find yourself in the same situation that I found myself back then, don’t worry as the world is full of people who have been there and done that starting with this article on setting up your accounting department as a small business accountant is for you.


Okay, enough of those motivating words. Let us get down to the real business by describing the steps involved in setting up your accounting department as a small business accountant doing this for the first time.

How to set up a small business accounting department

Understanding your new business environment
You will agree with me that what works in the accounting department of a health care company for example will not probably work well for the accounting department of a food processing company. The first thing to do in your bid to set up your accounting department for a small company is to get yourself familiarised with the industry business knowledge. You can leverage on these external sources of strategic information.

Understanding your new business environment will help get your feet wet and ensure that you are not trying to go to the moon with a sky train (though fast but cannot take you to the moon, you need a rocket to take you to the moon).
I have heard people saying; in company X, this is how they set up their accounting department without really minding the difference between the industries.


I cannot overemphasise the importance of setting up your accounting department of your business that is suitable for the kind and nature of the business in question.

Building a detailed charts of accounts
Chart of Accounts (CoA) is a fancy phrase used to describe the various classifications that a business entity can use to group assets and liabilities. This is where industry knowledge gained in the understanding stage of setting up your accounting department as a small business accountant is really helpful. You can easily get an already built template for your industry and adjust to suit your peculiar circumstances.

Choosing accounting policies and methods
Here, a choice has to be made between cash based accounting and accrual based accounting. Except on very few occasions, accrual accounting method is the way to go. By accrual accounting method we mean matching income against costs incurred to generate them.

At this stage, a choice is made on how to go about recording things. You can either decide to record your transactions manually or automate things. In this Google and information age, no one should be recording accounting transactions manually but it is a possibility. I however strongly recommend you go with automated accounting.

Developing accounting manual and procedures
Accounting Policy and Procedure Manual provide the approved policies and standard procedures for all financial transactions. These approved policies and procedures must be carefully studied and observed by all staff if the accounting function of the business and the business as a whole is to thrive.



This is where all the rules and principles are stated. Cash management policy for example will be contained in the accounting and procedure manual. You are free to include as many items as you want in this policy. Make sure that the management signs this document off and distribute it to all staff members. Also include how assets register is prepared in this manual.

Choosing accounting software
Never make the mistake of not having accounting software no matter how small you think things are. There are thousands free accounting software like wave accounting that you can start with and then upgrade later when this become really busy. The importance of accounting in this day and age will not be fully harnessed without software. Please don’t say excel is sufficient as it is not.

Determining and employing accounting staff
The staffing requirements of the accounting department will have to be determined before employing accounting officers. There will be no point employing 10 accounting staff is the workload can be managed by 2 or 3 people. Also, it will be a waste of resources if your accounting licence agreement only allows for max of 4 users and you employ 10 people in the accounting department.

You have to know when to hire accounting staff and how to hire accountants that will work in the accounting department for maximum efficiency. Hiring too late or too early can be counterproductive.

Training staff on how to use the chosen accounting software and other related technology
In order to have a vibrant accounting department, a structured training program has to be built into the accounting department. Caring for your accounting staff (which includes training and sound rewards system) is amongst the fundamentals of setting up accounting department for a small business. A good practice is to encourage staff members of the accounting team to take professional accounting exams like ACCA and become qualified accountants.

Planning for tax matters
A small business accounting department will not be full-fledged if it cannot handle tax matters of the company. A common oversight by most pioneering heads of accounts department is to leave the tax matters till the eleventh hour. Imagine the disappointment that will be experienced by your employer if they have to pay any form of penalty that relates to late submission of tax returns and other statutory payment.

Dealing with siege mentality
Brace up for all forms of attack coming to you as a pioneering head of accounting department of a small business. People especially those that have not really worked much will want to take you on at every slightest opportunity they have.

You will hear things like; this is not how we do it in my former place (if things were that rosy there why then did you leave?) while the pioneering staff of other department will say things like; this is not how we used to do it (why then was your service as a professional accountant needed if things were perfect?).

Review and take corrective actions where necessary
Continuous improvement and development is a management philosophy that has really changed things. Do not say that the accounting department is fully set up and then relax. Things have to be monitored and refined on a continuous basis.

We have extensively discussed the steps involved in setting up your accounting department as a small business accountant. Now is time for you to take action. But do not forget that you will be wasting your time following the suggestions in this blog post if you do not firstly acquaint yourself with the industry that you find yourself in as the head of accounting department.

Good luck

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