If you have been concerned about how to understand the accounting of your business, then this post is for you. Here, we will talk about bookkeeping for small business hidden secrets medium Matt Oliver to help you better understand bookkeeping and accounting in your small business.
Bookkeeping is a tedious job for many small business owners, and many of them would wish they could find someone else to handle the job. Of course, you can hire a bookkeeper to help you with this for more effectiveness. If you really want to stay on top of your finances, this is one part of your business you shouldn’t handle with levity.
If you wouldn’t hire a bookkeeper for this, you can take things up by yourself. You don’t need to know every detail about the finances. You only need a good grasp of the basics so you can effectively do the right thing to help your small business succeed. And that’s why we have written this post about bookkeeping for small business hidden secrets medium Matt Oliver.
What Are the Benefits of Business Accounting?
This is one of the things bookkeeping for small business hidden secrets medium Matt Oliver is designed to help you achieve. It will help you understand the important things you need to know about your business accounting. So, let’s talk about why effective business accounting can benefit your small business.
Accounting is used to refer to the process of keeping track of all the money that comes into and goes out of a business. It usually comes in handy when trying to measure the performance of any business. It helps small business owners to track their assets, liabilities, revenue, equity, and expenses.
The major benefit of accounting in business is to help you keep track of the business’s financial status. It will help you understand what position you are in financially and what to do to keep improving for the best. Accounting helps you know how much money you have in your company, how much you are owing, and what your net worth is like.
It is recommended that all small business owners read bookkeeping for small business hidden secrets medium Matt Oliver. That will help them know if the business has enough money available at the time to cater to upcoming expenses, such as payroll.
5 Accounting Concepts for Small Business
The five major accounting concepts every small business owner should know are:
- Cost Principle
- Revenue Recognition Principle
- Patching Principle
- Objectivity Principle
- Full Disclosure Principle
The type of accounting concept you choose for your business will solely depend on the size of your business and what information you need. To correctly identify which is best for you, you may need to consult a CPA for guidance.
Remember that accounting is important to running your business, so you can’t afford to jeopardize things because of the wrong choice of concept. So, after reading this bookkeeping for small business hidden secrets medium Matt Oliver, and understanding the basics, reach out to a CPA for help in choosing the right concept for your business.
What Are the Best Bookkeeping Software for Small Businesses?
Most times, you will need software to make your work easier in your accounting department. This software makes your job streamlined, hence helping you make quick and right decisions based on the information you get from your accounting analysis.
These are the 5 best bookkeeping software you should consider for your small business:
Choosing the right software for your business is very important. It will determine what decisions you make in terms of your accounting. However, some factors you may need to put into consideration when choosing a bookkeeping software are the costs, support, cloud or on-premise, integration, and customization possibilities. You should always choose software that would be easy to use for your business without wrecking your budget.
What Is the Right Accounting Method for Your Small Business?
This is another junction in your business accounting you also need to understand well. It is a critical part of Bookkeeping for Small Business hidden secrets medium Matt Oliver. While there are a couple of accounting methods you may be tempted to want to use, you should never go for anything else aside from Cash and Accrual accounting methods.
Choosing an accounting method is important before you go ahead to fill the first tax return for your business. You just need to get things right. So, let’s see what these two methods are.
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Accrual Accounting Method
In this accounting method, money is recorded when it is ‘won’ rather than when it is received, as it happens in the cash-based accounting method. That means even when the money is yet to be received; the method already documents the money as won.
For instance, if a customer signs a large contract, the Accrual accounting method records the money as won, even when the customer is yet to pay. Although it is a more complex accounting method, it is perfect for helping to create a good image for your company in the long term. This type of method is also especially useful for small businesses when trying to convince an investor or make a fast scaling decision.
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Cash-Based Accounting Method
Contrary to what happens with the Accrual accounting method, this method records money when it is received or paid. The method tracks income when it is received and expenses when it is paid. That makes it a perfect accounting method for some small businesses.
Small Business Accounting Hidden Secrets
Small business accounting is a difficult task. Every business owners need to understand the logical and rational aspects of it to help grow their business. That is why it is always recommended that you contact an accountant to help you with your books. Such a professional will be able to give you the right advice that your business needs to be successful.
Nonetheless, if you are willing to take things up by yourself, you should read this bookkeeping for small business hidden secrets medium Matt Oliver to know things for yourself. Let’s help you through the fundamentals; they are actually very important to effective bookkeeping for any type of business.
#1: Bookkeeping
Booking is the process of documenting your business’s financial transactions in books. According to journalist Matt Oliver, accounting is primarily used to collect and summarize the financial activities of a business and present them in a consumable way that offers financial data about the business or company.
Many businesses keep track of their businesses using different ledgers or business applications. At the same time, there are many of them that combine the two.
#2: Balance sheet
Moving deeper into bookkeeping and accounting for small businesses, we need to talk about the balance sheet. A balance sheet represents the economic status of your business at a certain point in time. This is usually done at the end of the month or year. By simply examining and evaluating the financial report of a business, you can tell what its present financial status is.
The balance sheet lists all your investments, including all your assets such as saving accounts and financial assets like loan collections. But much more, a balance sheet will also include your present liabilities, such as debts to repay.
#3: Capital
Every business is created to make money, but there has to be some money to be spent before that time. That is your capital. It is used to refer to the money you drop in cash or expenditures before your business starts making profits.
The capital can come from your savings, family and friends, crowdfunding, or the bank. It can be used for many purposes, including buying equipment, securing a business location, registering your business, etc.
#4: Expenses
Expenses are the actions that remove money from your business. These are items or services that you buy or use for a certain period of time to help your business derive revenue. Examples of expenses include loans for your company, monthly expenditures such as wages, power, and resource bills, rents, and other costs that remove money from the business.
#5: Income
Your income is the amount of money you are able to make in a year. Income can come from various sources such as sales, projects, investments, and many more. Your income is usually calculated by adding all your sources of income together. For instance, if you make $5000 from sales and also get $500 from investments at the end of the month. Then your total monthly income will be $5,500.
What Are Some Business Records You Should Keep?
Taking a step further with Bookkeeping for Small Business hidden secrets medium Matt Oliver, let’s talk about some records you should keep for your small business. These are records you should keep very well until they are delivered to the tax collector. In fact, there are some of them you should keep well for at least three years or even more.
Financial records: These include accounting, tax, and banking records. These are important documents to the smooth running of your business, and so you should keep them well. They are essential for managing your finances and will also come in handy when making important decisions that may affect the future of your business.
Legal records: These types of documents are important for protecting you from liability and ensuring that your business complies with the law. Legal records you should keep include contracts, agreements, and legal proceedings.
Marketing records: These include emails, advertising campaigns, and social media posts. Wondering who could ever need this? You never can tell; you may need to sell the business in the future. All these are what will increase the value of the business before your potential buyer.
Other records to keep: Some other records you also need to keep well for your small business include:
- Bills
- Payment records
- Documents that show previous tax returns
- Business deal records
- Proof of payments
- Canceled cheques
- Financial statement of your accountant or bank
- Credit cards and bank statements
