Santa Rosa Small Business Accounting 101 - Do you understand the terminology and processes involved in maintaining your businesses financial statements?
As a Santa Rosa small business owner, it’s important to understand how accounting 101 ties into your everyday operations. Keeping track of your profits and expenses will indicate how well your business is doing and what you need to do to improve. Even if you are able to hire a bookkeeper or accountant to handle your finances, it’s good to have the basics of small business accounting 101 down to oversee what is being done. Here are a few tips:
Assets are what you own or what is owed to you. This includes equipment, buildings, furniture and outstanding invoices (accounts receivable).
Liabilities are what you owe and other debts. This includes invoices you need to pay (accounts payable), payroll and taxes.
This is your assets minus your liabilities and is also known as your company’s equity.
This shows all the liabilities, assets and net worth of the company that provides a snapshot of what is owed and what is owned.
This is also known as an income statement, and shows what your company has brought in and paid out. It also displays what your income has been over a certain period of time. With the profit and loss statement, you will know whether or not your company is making or losing money - an important part of understanding accounting 101. You can determine which processes, services or products you need to enhance, and which ones you need to get rid of.
This statement displays the cash you have going in and out over a certain time. You can consider this statement much like a checkbook. You will know how much cash you have and where you are hemorrhaging funds.
These financial statements are crucial elements of any Santa Rosa small business accounting 101 and should be prepared on a monthly or somewhat regular basis via professional bookkeeping services, the accountant or business owner and reviewed to see where the company stands.
You may want to obtain a financial accounting program that can generate these documents for you at a moment’s notice. A financial accounting program can also help you design and prepare invoices, estimates and will keep all your financial records and information in one consolidated place for better recordkeeping. The principles of small business accounting 101 are not hard – it just requires due diligence and good reporting procedures.
you get over the initial hurdle and learning curve, keeping up with these
accounting 101 basics will be a breeze! If needed, there are classes available
that teach business accounting 101, or you can have outsourced bookkeeping services or your
accountant show you the basics. The financial health of your company
depends on it.
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