As a small business owner, it is critical to keep your accounting in great shape. Your financial fitness is vital for you to make informed business decisions, obtain capital, and pilot your business on the best path forward. Intimately reading your financial reports is just like a doctor understanding the vitals of a patient. It is paramount to running your business.
Your Small Business needs a path forward to guide it to maximum profitability. Many owners look at their accounting and booking systems as a necessary chore. Although the mechanics are required, they can be done efficiently and provide business owners with a map to steer your business in the right direction.
Besides, efficient systems and the resultant clean books will save your company a ton of money in the long run, with accurate data and excellent business information.
However, before you can achieve these benefits, you need a basic understanding of the types of accounting systems and some of the terminology. This brief newsletter today introduces the business owner to the essential information of accounting systems.
Bookkeeping involves the daily recording of a company’s financial transactions. Businesses track all information on their books to make critical operating, investing, and financing decisions. Bookkeepers manage this data to assure the financial reports are ready for the end of month closing and tax time. Bookkeeping can be a very laborious task, or it can be efficient. Succentrix of Gwinnett offers labor savings, cloud-based software to minimize this effort and automate data compilation. The accounting process must start with useful data, and that is why it is crucial to set up a reliable, efficient bookkeeping system. Garbage in, garbage out.
Part of Bookkeeping is the tracking of expenses. Costs and revenues must be accurate. Personal and business expenses must be separated. A reliable system is required to ensure accuracy. A need for a system seems obvious, but the negative consequences can be substantial.
Keep Track of Your Expenses. It is best to track all of your expenses. Use a system. Log it. Automate. Many systems allow you to take a picture of your receipts. At Succentrix of Gwinnett we can implement an arrangement with you that will significantly reduce or eliminate the need for redundant data entry and improve your accuracy. The easier it is to collect data, the more likely your data will be accurate.
Accounting is the analysis of financial data. Small business owners will get a payback of financial efforts at this stage through useful, timely reports. Unfortunately, many small businesses do not, or they do not know how to utilize the reports. At Succentrix of Gwinnett, we can assist your business with Timely Financial Reports, Proactive Strategic Business Advice, Peer comps, and Competitive Advantage Analysis. We utilize efficient, clear to understand systems. We often not only provide more services but also at the same cost as other firms providing little business analytics. In summary, accounting should give the business owner the intelligence to make informed business decisions.
The critical difference between the common two types of accounting systems is when they record a business transaction. One kind records a business transaction when there is actual cash exchanged (actually spent or received). The other (accrual) records a deal even if money has not been transferred (only accounts payable or receivable recorded in your books).
Different considerations determine if a company uses the cash or accrual method of accounting. For your reference you can read about each at the following web sites:
In summary, Cash systems are simple and can lead to lower taxes. Accrual systems are useful in the analysis of business performance. Businesses should look at finances on an accrual basis to better understand their profitability.
Many other reports are unique to your business. Succentrix of Gwinnett’s Accountants and Cloud-based software can quickly help you with the analytical tools. We create a dashboard of crucial measures with you unique for your business. For example, job costing, margin analysis, are tasks that can be queried and used for more informed business decisions.
If a pilot did not have a clear picture of the status of his plane, he could easily crash. If a doctor does not have an understanding of your vitals, he could prescribe an incorrect treatment. Therefore you need to have the very best information – clear, real-time, and accurate to make business decisions.
As you can see, regardless of the type of system, you need to use accounting reports to make business decisions. Are you growing profitably? Or are you just growing? Where are you spending your money? Are their opportunities to increase profit? A comparison of different products, services, jobs, productivity, and other factors need an analytical review.
As you correctly record these financial transactions over time, they will help you run your business and potentially have a flawless tax filing. The process of tax reviews more than once a year enables you to stay ahead of the game and, at the same time, experience a more favorable tax outcome. The data you collect is invaluable for your tax preparation and will save you significant money.
No one likes setting up complicated systems. In this article, we showed you why Financial accounting is your dashboard for running your business. Today, with the right organization, it should be simple and integrate into your iPhone and PC quickly for informed business decisions. Call Bianca Rayner at 678-932-9976 for more information and 20% off your small business tax consultation.
© Succentrix of Gwinnett. Author Ronald Rayner, Operations Manager. February 17th, 2020