
Free Guide to Increasing Sales in Your Retail Business
Are you ready to grow and create a successful business? In this guide, we outline a variety of strategies designed to help you do just that.
Good accounting and financial management are at the heart of any successful business. When you can understand how much money is coming into and going out of your company, you can make better decisions about cash flow, profit margins, budgeting and much more.
The problem is, to many business owners, accounting can seem like a complete mystery. With terms like accounts receivable, reconciliation, depreciation, balance sheets and more, it’s no wonder you might find the whole idea daunting.
Don’t worry — we’ve got you covered. Here, we’ll explain the basics of small business accounting, and tell you what you can do to keep things simple, stay on top of your finances and make the most of your money.
At its simplest, business accounting is simply managing the money that comes into, goes out of and stays within your business. There are several methods for managing accounts, but below we’ll explain one of the simplest. The essential parts of an accounting system are:
Also known as “accounts receivable.” This is how you take money into your business: by sending out invoices, selling goods and services or otherwise collecting payments from your customers.
Also known as “accounts payable.” This is how you spend money from your business: by paying bills and expenses for goods or services you receive from suppliers, vendors and others.
This is a check you should perform on a regular basis. It involves going through all of your business bank, credit card and other accounts and checking that all transactions are recorded in your accounting system and vice versa.
This is how you keep track of the money you currently have on hand, your assets and your liabilities. These reports can include cash flow statements, profit and loss reports, balance sheets and more.
Together, these four areas form the basis of any small business accounting system. Let’s look at how they work in practice.
It can be just that simple, but there are other elements you can add to create an even more robust management system.
There are plenty of applications out there that can help with your business accounting — we’ll have more on the most popular software below. Many of these services have extra functions to assist you with aspects that include:
Here’s how often you should update your accounting and finances:
Create an invoice and add it to your accounts receivable whenever you do billable work or sell something to a client. Seriously, you never want to forget to ask for money you've earned! You don’t need to send the invoice right away, but always make sure you add invoice items as you do work.
Create an entry for accounts payable (like a bill due) whenever you order something you need to pay for, or you receive a bill or other demand for payment. Just like invoicing, you need to stay on top of any money going out of your business.
You should reconcile your accounts at least once a month, or more often if you have lots of transactions. Not staying on top of reconciling your accounts is a great way to lose your sanity!
It’s helpful to look at your account reports every couple of weeks so you can make sure you’re on top of everything.
Of course, you don’t need to do your business accounts alone. Here’s where you can get some help.
There are plenty of online software applications that can make small business accounting much easier. Some of the more popular accounting software solutions are FreshBooks, FreeAgent, Zoho Books, QuickBooks Online, Xero, Wave and ZipBooks.
They all have free trial periods, so you can try them out and see which is right for you. Most of this software functions similarly; once you understand how one accounting application works, you should be able to pick up another application fairly quickly.
Bookkeeping is a part of accounting and helps you to manage the transactional side of your accounts. Bookkeepers focus on accounts payable, accounts receivable and especially reconciliation. You can easily hire an online bookkeeper, which will often be much less expensive than a fully-qualified accountant or CPA.
Note that even if you hire a bookkeeper, we still recommend having an accountant do a final check of your accounts and help you understand, manage and file your taxes. You can find bookkeepers at Upwork, Fiverr, People Per Hour, Freelancer and other online platforms.
Accountants do more than bookkeepers. In addition to bookkeeping tasks, they can also provide financial advice, help you understand and file your taxes and dig into the details of your business. They are generally more expensive to hire than bookkeepers, although using bookkeepers and accounting software can make their jobs easier and lower their fees. Find accountants at Upwork, Fiverr, People Per Hour, Freelancer and other online platforms.
Some business owners prefer to deal with their accounts face to face. Fortunately, there are likely to be plenty of accounting firms within a few miles of where you live. Give them a call and find out how they charge for their services, then shortlist them and choose an accountant who meets your needs.
There you have it: Small business accounting isn’t as daunting as you once thought! Take it step-by-step, get a good accounting system in place, find a professional to help you out and you'll be on top of your business finances in no time.
There you have it: Small business accounting isn’t as daunting as you once thought! Take it step-by-step, get a good accounting system in place, find a professional to help you out and you’ll be on top of your business finances in no time.
Are you ready to grow and create a successful business? In this guide, we outline a variety of strategies designed to help you do just that.
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