In order to manage small businesses, no one needs an MBA degree from Harvard Business School, however, you must have a preliminary knowledge of Accounting and Bookkeeping and using an accounting software. This can save loads of money and time of yours. Not sure about the time, but I am pretty sure about this, that it will save a lot of frustration of yours.
Now, let’s say you have plenty of resources and you can easily hire an accountant. Now, in this case, you will hand over the entire responsibility to someone you don’t know well and the funny thing is the responsibility of that thing which also you don’t know well. So, there are chances that an immoral accountant can commit fraud without getting noticed for some period of time.
Apart from this mediocracy, if you have basic accounting and bookkeeping knowledge, you’ll generate a good business sense. Honestly speaking, many of the fallen business enterprises, most of the owners of these organization have no idea about the accounting of their company. This is the difference between successful and unsuccessful business.
Let’s talk about some preliminary facts you must know about accounting,
The Importance of Accounting & Bookkeeping for Small Business.
Just to be clear I want you to know that financial analysis and savvy record-keeping is very crucial not just to keep an eye on your expenses but also in discovering new possibilities of growth. In addition to this, it also makes you aware to be responsible for tax obligations to your employees and to your government.
Here are few examples of how accounts can be used not only just managing debits and credits of a company but also in playing a crucial role in making an everyday business decision.
- Closely monitoring your accounts receivable to illustrate trends or behaviors in your customer base. It can also cut down on the costs you incur by pursuing late payers.
- Establishing a detailed budget to help discover inefficiencies within your operations.
- Sudden changes in vendor costs or sales revenues can alert you to important industry changes.
- Understanding your financial position in order to spot problem areas that could interfere with loans earmarked for expansion.
Now, as you have considered your business strategy and your company’s financial goals. It really doesn’t matter if you’re a sole entrepreneur or you have an entire staff, all your survival principles will depend on your clearly stated financial objective.
Learning bookkeeping and accountings: Importance
I had said it more than many times that, most of the businesses fall out because of poor bookkeeping. Proper bookkeeping and accounting is not just a legal requirement, but it is also the most crucial element which all successful businesses (Small and Big) share.
If your business if charged with poor bookkeeping and accounting then, you’ll be charged with overdrafts and late charges, and not just that keeping poor records also gives an uninvited invitation to Internal Revenue Service. This can cause you big trouble. You might face an audit or other tax consequences. So, in a nutshell, poor bookkeeping and accounting will cost a small business loads of money and I reckon it as the first step to demolition.
In order to overcome that, you might want to take a course on business accounting include bookkeeping and accounting and this can be further taught to any of your trustworthy people. And this will give you ample of an idea about how bookkeeping is done and you’ll always keep track of it.
If you wish you can also go for reviewing other accountant’s work in order to understand bookkeeping and accounting.
There are four principles of financial statement in bookkeeping and accounting,
- Income Statement.
- Balance Sheet.
- Cash Flow Statement.
- Statements of Retained Earnings.
Taking an accounting course will be extremely beneficial for your knowledge base and for your finances. It will save tons of your money which you might have to give in form of fines and taxes. But if you learn it properly, you will avoid that extra expense. In addition to that, it will also make you aware of any kind of fraudulent activity by your hired accountant (Just in case).
How do you like my views, Please share your feedback via comment? If you have any question regarding the courses of bookkeeping and accounting, mention it in your comment and I will get back to you as soon as I can.