Small Business Accounting - General Strategy
As a small business owner you have more important things to do than to keep your own books. Identify someone qualified to take care of your books for you, so you can get back to the job of running your business and generating profits.
Each month or quarter be sure they do the following things for you...
These tasks form the solid foundation of your small business accounting system. You may be able to customize the package of services you receive by adding payroll, tax planning, tax preparation, or other services.
Reconciling your business checking account each month keeps your bank account, accounting, and taxes up-to-date.
Reconciling your account each month allows you to...
An income statement, otherwise known as a profit and loss statement, basically adds an itemized list of all your revenues and subtracts an itemized list of all your expenses to come up with a profit or loss for the period.
An income statement allows you to...
A balance sheet gives you a snapshot of your business' financial condition at a specific moment in time.
A balance sheet helps you:
Balance sheets, along with income statements, are the most basic elements in providing financial reporting to potential lenders such as banks, investors, and vendors who are considering how much credit to grant you.
The general ledger is the core of your company's financial records. These records constitute the central "books" of your system. Since every transaction flows through the general ledger, a problem with your general ledger throws off all your books.
Reviewing your general ledger system each month allows you to hunt down any discrepancies such as double billings or any unrecorded payments. Then you can fix the discrepancies so your books are always accurate and kept in tip top shape.
Spend time with those qualified to help you so you fully understand how to interpret and utilize the financial information provided. Make sure you understand consultations and compensation whenever you have questions or concerns.