What should you know about bookkeeping and accounting? Imagine that with a click of a button, you could know exactly where you are financially and stay on track.
Here is what you should know about bookkeeping and accounting.
The importance of keeping adequate records cannot be stressed enough.
Without financial records, you can’t determine how well your business is doing or where it is going.
At a minimum, records are needed to substantiate. But, most importantly, they are needed to run your business successfully and increase your profits.
You need to know what your taxes returns are under federal and state law including income and social security. You need to know requests from vendors, loans from a bank, your claims about your business (especially if you want to sell it).
So, how do you set up the right bookkeeping for your business?
The type of records and how many you need depend on your particular operation. An account and the SBA Resources (link) can provide many options for you.
When deciding what is (and is not) necessary, keep in mind these things:
- How will your records be kept?
- How important is this information?
- Where all is the information available and how accessible is it?
- What financial statements will you need?
There are 3 financial statements you need to make sure you understand.
Your balance sheet. This is the record of all your assets, your liability, and your capital. It basically tells you how much you owe, how much is in the bank, and how much credit you have.
Your profit and loss statement. This is a summary of your earnings, your expenses, and your net profit over a period of time.
Your cash flow projections. This allows you to see how much money and where that money flows. You’ll be able to understand your busy times and your slow times to help you manage your dollars.
Hire someone to you with your accounting so that you can get out there and start selling. Get your head out of the sand so that you can see this clearly and start taking action.
Finances are the foundation and the heartbeat of your business, so let’s get a handle on it.
Your partner in prosperity,
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