Learn To Focus On Small Business Accounting For Dummies
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Bookkeeping, learn quick and let?s turn the page and get to something interesting! Can?t someone else worry about the number ? I really don?t do numbers, I am a welder! All I have to do is make my product well and everything will be OK.
Does that sound familiar? Well, new business owners and managers have to develop basic skills in financial management and bookkeeping. Just like you wouldn?t let someone else in the office look after your tools, your finances are also the heart of your business. Your business depends on a variety of things to keep it healthy ? a good product or service delivered by competent staff is one part ? but well kept books is just as important.
People usually are not passionate about things they don?t understand. I worked in a company where the manager would make fun of the word ?general ledger? Later on I realized it?s because he doesn?t understand. So every month when the bookkeeping was completed for that month I would print the financial statements and the general ledger and set up a meeting with him to discuss his financial picture. Within 3 months our meetings became the highlight of his day and he never made fun of the word ?general ledger.
What you need in your business are sound financial statements that you can rely on to make good decisions. The financial statements will tell you so much; it will make you dizzy with excitement. Always keep in mind that your goal is to have accurate financials. Learning even a little bit about bookkeeping will change your experience with bookkeeping from dreariness to having fun. Let yourself get involved with the numbers. These are the numbers you created from your sales, expenses and assets, so by recording those in proper form will give you your financial statements. It?s that easy.
Once you?ve taken the time to master the basics in bookkeeping and creating accurate financial statements ? that?s when the fun begins and you can start to manage your business. You don?t have to wait for bank statements to arrive in the mail; you already know your bank balance and no more surprises at the end of the year when your accountant finishes you taxes.
The first step is to set up your accounting system. The second part is to understand basic bookkeeping and different categories. Once you?ve mastered the basics of keeping your books and having accurate financial statements, the fun begins when you start to make changes and seeing the result on your financials. You no longer need to wait for your bank statement to arrive in mail because you?ve already entered your cheques and deposits.
Some people think of bookkeeping as an exercise that they go through for one reason, the tax man. No wonder everyone leaves the bookkeeping to the end of the year and they scram to get the information together. You have to keep accurate books for yourself and the health of your business. 1- Price your product or services accurately. 2- Know if you?re making or loosing money ? over all or just on specific projects. 3- Understand your cash flow. 4- Get to know a banker
Pricing your product is the first single important thing you have to do in business. There is a simple equation; you have to charge more for the product than the cost, right? So did you consider that loan you opened last summer when you couldn?t meet your source deduction remittance bill? And how about the computer purchase you put on your Visa card. Nearly everyone can figure out the direct cost of their product or service ? having a good set of books will help you to know what else goes into the equation. Which can make the difference between making and loosing money?
Cash flow, I can?t say enough about cash flow and the importance unless I share this story with you. Joe is a house painter. First summer starting his business there was always money in the bank from his customers. By winter business slowed down and Joe was happy he made a profitable business in his first year. After two weeks, Joe looked at his bank statement and revised his profit down. A month later Joe had to revise it down again to account for the workers compensation bill, HST bill, and the $5000 error he made in his deposit. Joe visited his banker and got a loan to tie him over the winter months with a promise of paying it back in 3 months. One of the most important things you will learn from keeping your books is how to understand and mange cash flow.
Make your banker your friend. Share the highs and the lows of your business. Impress them with keeping a good cash flow that will tell them you know all about your business. Having a banker, accountant and insurance agency on your team of professionals will help you when you need them. Find someone you can talk to, work with and keep them posted, good or bad. Developing business relationships assures that they will support you for a long time.
Article Source: Articlelogy.com
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