Tips On Small Business For Dummies
Thursday, August 5th, 2010Bookkeeping, paper work, get it done quick or have someone else do it. My responsibility is creating the right landscape for home owners. All I have to do is do my job well and everything else will be OK. No, that?s not all of it, new business owners have to develop some basic skills in the financial department of their business. After all who knows your business better than you?
Bookkeeping, I want to learn it quickly and get to something interesting. How about contracting it out and let someone else worry about the numbers, after all, I am an electrician. I do all the wiring for commercial and residential properties and leave the number crunching to others. You can contract out your bookkeeping but if you have no knowledge of how to read a financial statement you don?t know how accurate the bookkeeping process is. Learn first than contract out.
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.
Knowledge is power; you can?t ignore an integral part of your business and expect it to stay afloat indefinitely. So why not spend some time and learn bookkeeping, how it can help you and how to do it well. Even if you contract it all out at least you will know if it?s being done well by reviewing the general ledger and financials on regular basis. This goes for other aspects of you business. Just like you wouldn?t hand over and electrical project to an employee, you would most likely oversee it, or do it yourself first before handing to someone else. Bookkeeping is the same. It is the heart of your business with out a good set of books one can get lost.
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.
Why keep records? Isn?t keeping records just to see how much money has to be paid to the government for income tax? That?s how business people think. No wonder bookkeeping is always left to the end and than you?re scrambling to get it done, hoping in the end you have submitted all your receipt to minimize taxes. Here is the full store on why keeping good records are important. 1- Are you pricing your product or service accurately? 2- Do you know if you?re making or losing money? 3- How is your cash flow ? short and long term? 4- Do you have a banker as part of your professional team?
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?
What?s cash flow? Every business needs to know about cash flow. Actually even individuals working for a salary need to understand cash flow. Selling a product or service for profit is not enough. 1st ? record your opening bank balance. 2nd ? subtract all auto debits from your account, vehicle lease payments, rent, insurance, etc. 3rd ? take off all non auto debits from your account, telephone, labour, government liabilities, Workers Compensation, etc. 4th ? record all your cheques and customer deposits. 5th ? what you?re left with should be the balance in your bank.
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.
Find full information and details on ways you can use simple accounting to create a thriving business and keep track of expenses. When you use Accounting for Dummies, you will be able to take control of your accounts fast!