Small Business Accounting – What You Need To Know!customonecfo
Unless you are educated as an accountant and starting your own business, it is unlikely you know all you need to know about setting up your accounting and financial reporting systems. Small business owners have a variety of skills and abilities based on their education and experience when they start their business. Few know everything about running a business from administrative systems and specialty tasks such as calculating and reporting taxes, setting up accounting systems, and doing financial analyses. Owners must also judge how much of their time they have to spend trying to do those tasks themselves with everything else they have to do. A part of that evaluation is knowing the what accounting tasks are necessary for your small business.
What Accounting Means For Your Small BusinessThe most basic function of accounting is keeping track of the company revenue, cash flow, invoicing, and outstanding accounts receivable. There are a number of discrete tasks that must be completed on a daily, weekly, monthly, quarterly, and annual basis, such as:
- Daily checking your cash position – cash flow is the lifeblood of your business. Weekly recording of transactions – invoicing, receiving payments, paying bills, etc. This includes keeping track of receipts for each transaction. At the end of each week, do a more in-depth cash flow review.
- On a monthly basis you need to balance your company bank accounts, review outstanding accounts receivable (A/R), analyze work flow and/or inventory, review your payroll and tax payments and review your Profit and Loss (P&L) statement against your annual budget, the prior period, and the same period in the prior year. You also review you balance sheet against the prior period and the same period in prior years to track your business performance over time.
- On a quarterly basis you utilize your monthly records to compile a quarterly financial statement that provides a consolidated P&L statement, payroll reports, sales tax records, and estimated income tax. Once these statements are reviewed and approved, you have to make all your payments to vendors, payroll taxes, income taxes, and sales taxes.
- Annually, you will roll-up all of your quarterly financial statements into an annual financial statement, perform the same reviews, and make your final fiscal year tax payments.