Accounting Needs For Small Business
It is obvious that most small business owners don’t give much thought to their account record when they start their business venture, they don’t think about the accounting much at all. They only think about running the business and how to make cash. Poor financial records are the reason many small businesses fail today. Indeed, keeping accurate and timely account records for your business is important.
The most important need of accounting for business owner is to be successful over their business and to be able to answer rising questions like: how is the business is doing? Is money flowing in from the business? Have you been charging enough for your products and services? How have you been keeping up with your expenses?
Accounting is for Small Business Owners, not only for corporates
Virtually speaking, many small business owners today have no idea on how their business is really doing. Some believe as much as cash is in the bank, their business is doing well, honestly speaking; this may not be a good assumption. And if bad financial decision is made and you didn’t realize not until the end of the year, I’m afraid it may be too late to recover from such an expensive mistake.
Another need of accounting to business owner is that, it helps you to know if you are pricing your product or service accurately or not. Knowing the correct price to charge may be one of the most important decisions you make in your business wrongly and this greatly affects the income rate of your business; you charge too much and you may end up losing business to your competitors, you charge too little and you may price yourself right out of the business scope. All you need do is to make sure you price your product or service high enough to cover all of your costs-prices as well as costs that might not directly go into your product, such as: loan costs, insurance costs, supply costs, and so on.
A business owner needs accounting in a bid to apply for a business loan. It is certain that you will be asked to supply your financial statements to the financial institution so they can determine if you will or not be able to pay the loan back. And if you have to take time to update your financial records before you can apply for a loan you could definitely miss out on a business opportunity.
Accounting must be done properly to be compliant
Accounting is needed to prepare your tax return that you may have good business records as poor records can result in missed tax deductions and therefore higher taxes. Having good records and preparing your taxes will be way faster and a lot easier. Similarly, when you pay a tax preparer to complete your return poor records could result in higher fees as it will take the tax preparer longer time to file your tax return accurately.
More importantly, good records can save your time and money in your business firm. You are most respected when you are working on profitable activities especially getting the sale or delivering the service.
Accounting is very important and much needed to save time and help make more income. Luckily, the key is to keep accurate, timely business account records so as to always know where your business stands and you’ll never have to miss out when businesses are available.
Benefits of Keeping Good Account Record
Ordinarily, it may seem like a hassle or some kind of difficult chore, but keeping good account record is one of the best decisions you need to make when it comes to being successful at your business. Speaking the fact, keeping accurate and up-to-date records can provide you with a long list of advantages and benefits such as keeping your business running smoothly, and staying out of financial troubles of any kind.
Here are some benefits of keeping good account records:
Healthy Financial Stand: As a business owner, keeping good records can help you maintain healthy financial stand and put your business in a good order. Indeed, this is just one of the various benefits good records keeping and monitoring our account provides you with.
Easy Retrieval of Longtime Information and Data: Another benefit of keeping good account record is to ensure accurate records and to keep track of all aspects of their business. It enables you to refer back to previous records and compare them to current records, which makes you to monitor and know whether or not the business is improving, maintaining or running at loss. This supply needed information to keeping the owner informed and allows them to determine where to make improvements if business seems to be falling. It is a great avenue to making your business successful or saving your business from crashing.
Allocation of Prices and Record Purchases: Monitoring and keeping good business account record also enables the business owner to keep track of purchases. That is, the business owner will record items purchased to resell to their customers at a particular profitable price. It is very vital to keep documents, it portrait how much you paid for each product and how much of the product you have purchased and help to allocate your selling price accordingly. The record also includes: bank statements, voided checks, receipts, invoices, and credit card receipts or statements. Keeping track of these transactions throughout the year all along helps the business owner to determine their inventory at the end of each year.
Maintain Revenue And Expenditure: One more important benefit to keeping good account records is that it helps to keep track of your expenses. The expenses you incur are the costs of your business such as rent, supplies, or purchasing business licenses, you need to keep good account of these documents in order to keep your business up and running. Keeping good record of all of these documents is how you track where and how your money is being spent.
In case your business has a petty cash account, you should keep specific records about the spending activities also ensure that your business account record contains a place to record gross receipts. At times, some business owners are required to travel in the course of doing business; this fact makes it imperative and creates the need to keep track of all their expenses each time they travel. These expenses include their lodging bills, meal bills, mileage, etc when away on the journey.
Promote Business and Guarantees Lasting Business Life-Span: Finally, maintaining good business account records promote and guarantees a lasting life-span of your business venture. It is the defining factor of whether or not a business succeeds. Accounting makes it easy for buyers to maintain good, up to date records as this shows the financial history of your business. During tax collection, it will be very easy to claim tax deductions by when you have complete, orderly account records. As small business owner it is very crucial for you to do account as it will help your business succeed.