At some point, somewhere, in someplace, someone you know is thinking about or actually starting a viable business of some kind. Whether they succeed or fail in this endeavor will depend in part on how well they manage the books. The activity of recording business transactions or bookkeeping helps businesses account for what you’re doing now and hope to do in the near the future.
Not a numbers person? Don’t let that frighten you. Think of it, instead, as just information about your business. And that means to a large extent, your employees, your customers, your vendors. The total of this aggregate and more are your business’ assets. Let’s say you entered all of this data into a spreadsheet to keep things organized. This would help you better track the businesses expenses. And to make things easier you can use bookkeeping software to simplify the process.
Assets and Liabilities
Here’s the skinny on these two biggies. Your assets would be your business equipment, inventory items, accounts receivable (money owed by customers). Your liabilities would be for example, money YOU owe to others (accounts payable), credit card balances and other balances scheduled for the following year.
What does all of this counting of assets and liabilities mean? Well, once you set everything up right, it will help manage the financial health of your company. People go into business to make a profit, and hopefully reduce their taxes as well. If things get too challenging, there are capable business accounting professionals available to assist you.
Professionals Are Available
Watson & Watt are a small business accountant firm that will make sure your books stay balanced. They use technology strategically to minimize the more boring parts of the number crunching task and show you visually the health of your business.
But what if you have a small business and happen to be the DIY type? No matter, general business accounting is just another skill that can be learned, in time. But fair warning, there will be some required reading on your part.
Here are a few necessities:
- Register your business
- Open a bank account
- Set-up your bookkeeping system (payroll, import tax info)
- Organize your business’ receipts
As well as know your overall business numbers as well as a good chef knows to the penny his restaurants food cost. Whether you opt to go solo or use a trained professional is your decision. A good rule of thumb though is to keep things simple. Remember, assets are items that add value to your business (e.g., cash on hand, the machines in used in your business, cash). Liabilities are owed credit amounts (i.e., accounts payable).
Take things one step at a time. Enter data carefully. Enter data accurately. Ask questions where appropriate. Back up your data. In time, you will make steady progress. Who knows, you may even begin to enjoy the whole numbers side of your business. Learning can be fun when you’re doing something you enjoy.