The Fundamentals of Accounting for all Small Business Owners

02 Oct 2017
blog

Running a small business isn’t that hard. Many people who started small have grown to business giants today, therefore, starting a small business might be your best decision, but one area of running a small business which is usually not understood by young entrepreneurs is accounting. You might ask why people don’t understand this field, because this area in itself is vast and covers a wide range of options such as reporting standards, employee payrolls, managing cash flow and reporting standards. That is why you need a person who has expertise in this field otherwise your business could crash even before flying. Hence most small business owners out of need hire accountants and bookkeepers whose only job is to administer and manage this particular area of the business, however, hiring an accountant can be very expensive, this is where Entromizer comes in. Entromizer is an online based accounting and inventory solution, besides this, it also gives you an accountant to supervise your system plus you can also send an inquiry. The best thing about Entromizer is that it will relieve you from all the pain you had from accounting nevertheless, a crash course on accounting isn’t bad either, so below I am going to explain the basics of accounting just to give a heads up for your small business.

Firstly, you should get in close with your bookkeeper or accountant, and by close I mean familiarize yourself with the work they are doing, as it does not matter whether your day is associated with casual day to day accounting. Because you don’t need to know the specifics of accounting like the ins and outs of every regulation there is, all you need to understand are the end results of such regulations; now you may ask how will these help you? Firstly, it will build better relationships with your accounting advisors and secondly, the data and the reports that they provide can be utilized more efficiently as it will help you in taking better decisions so that you can plan the next big step for your business.

Basic Principles

There is a broad range of topics that accountings incorporates, such as providing advice which is based on data, interpreting financial data and generating reports that are based on that data. These reports are crucial for you, as they not only play a vital role in internal decision making but they are usually reported to third parties as well.

The data which you have in your hand is going to be the most accurate than any other report or advice that you may receive from various people. And that is the primary reason why many small and big businesses merge their accounting software with the rest of their company’s software which is responsible for administrating all internal and external affairs. The reason for this merger is to ensure that whoever is looking after accounts and generating the reports must have the most up to date and accurate data. The report when it is once generated will provide with the most vital information which will be crucial for you to understand your business health and more importantly it is most significant for future decisions and actions that will hugely impact your business.

General Ledger

The General ledger is an essential sheet that will be the primary record of all the revenues and expense your business will go through. The log will include every financial transaction no matter whether revenue or expense. There are other important documents like balance sheets and profit and loss statements that are solely based on this central and fundamental document. The daily tasks which are carried out by the bookkeeper or accountant you have hired will be feeding information directly to your ledger, and I will also extract data when it is required.

Using Financial Reports

Financial reports should not be takenso lightly as they play a major role in making the right decisions. These reports can provide with both big and small picture views. Therefore, you may manage your decisions and accounts according to what seems best to you. Some important reports are:

Cash Account Report: This is a critical report which will provide you with what you have in real on hand in the liquid assets. If you are planning to sell a new product, then this report will let you know that either you have the cash available for carrying out the new inventory or you should drop down this idea for now.

Sales Tax Reports: This again is an important report which will greatly help you in keeping an eye out on the amount that you owe for sales taxes. This report will also list the amount of cash that you collected which will aid you in paying the tax in full when required.

Inventory Value/Costs: This kind of reports are primarily relatedto sales and revenue that will help to regulate if your margins are enough and if you are things aren’t looking too bright for example you are using too many resources in high-cost then lower the pace on your product selling.

What Needs to be Tracked?

Here I will tell of the things that need to be monitored and long story short; everything needs to be tracked. Tracking each detail is essential in determining the value and health of your business. It is precise to know all your assets, margins and liabilities. To figure out these values, you need have thorough accounting practices which will be solely based on your transaction history. For instance. The levels of your inventory are tracked not only refers to the number of units per product but even on the grand total of the inventory you have on hand. If your assets are depreciating, then all your accounting operations will address alterations accordingly as required.

To learn every aspect of accounting won’t help you instead your primary focus should be on the details you lay your decisions on. These details will actuallyassist you in comprehending your entire business.

Looking for a simple yet effective accounting and inventory software for managing your business then look no further because Entromizer is here to help you. It has jaw-dropping facilities like being multilingual, Multi-Company,multi-branch and multi-currency as well.

Some Features of Entromizer are

•    Specially designed for small business owners, entrepreneurs, freelancers, consultants, etc.

•    Nothing to install – no need to ever download updates

•    Get secure access from anywhere, at any time and on any device

•    Visually manage your business’s cash flow

•    Multi-level security layer to keep your business information safe

•    Customized professional invoice and quotation

•    Flexible pricing and affordable monthly subscription

•    Completely free support the way you want it: Video Tutorial, blog, Support Forum and Ticket, Live Chat, etc.

•    Manage your accounts, suppliers, customers and employees from one place

Subscribe to our Newsletter

Tips and tricks to make your Website and online marketing effective for your business. Subscribe and get our weekly newsletter straight to your inbox.

Unsubscribe anytime