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One might be led to believe that profit is the main objective in a small business but in reality it is the cash flowing in and out of a business which keeps the doors open. The idea of profit is relatively narrow and only looks at expenses and income at a particular point in time. Cashflow, however, is more dynamic in the sense that it’s worried about the movement of money in and out of a small business. It is concerned with the time of which the movement of the amount of money takes place. Profits do not necessarily coincide with their associated money inflows and outflows. The web result is that money receipts often lag cash repayments and while profits may be reported, the business may experience a short-term dollars shortage. For this reason, it is vital to forecast cash flows and project likely earnings. In these terms, it is very important understand how to convert your accrual earnings to your money flow profit. You have to be in a position to maintain enough cash on hand to run the business, however, not so much as to forfeit possible earnings from other uses.

Why accounting is needed

Help you to operate better as a business owner

Make timely decisions
Know when to hire a team of employees
Discover how to price your products
Learn how to label your expense items
Helps you to determine whether to develop or not
Supports operations projected costs
Stop Fraud and Theft
Control the largest problem is internal theft
Reconcile your books and inventory control of equipment
Raising Capital (enable you to explain financials to stakeholders)
Loans
Investors
What are the GUIDELINES in Accounting for SMALLER BUSINESSES to address your common ‘pain points’?
Hire or check with CPA or accountant
What is the best way and how often to contact
What experience are you experiencing in my industry?
Identify what is my break-even point?
Can the accountant assess the overall value of my business
Can you help me grow my business with profit planning techniques
How will you help me to prepare for tax season
What are some special factors for my particular industry?

To succeed, your company should be profitable. All your business objectives boil right down to this one inescapable fact. But turning a profit is simpler said than done. To be able to boost your bottom line, you should know what’s going on financially constantly. You also need to be committed to tracking and knowing your KPIs.
Do you know the common Profitability Metrics to Monitor running a business — key performance indicators (KPI)

Whether you decide to hire an expert or do-it-yourself, there are some metrics that you ought to absolutely need to keep track of at all times:

Outstanding Accounts Payable: Spectacular accounts payable (A/P) shows the total amount of cash you currently owe to your suppliers.
Average Cash Burn: Average dollars burn is the rate at which your business’ cash balance is going down on average each month over a specified time period. A negative burn is a good sign because it indicates your business is generating funds and growing its funds reserves.
Cash Runaway: If your business is operating at a loss, cash runway helps you estimate how many months it is possible to continue before your organization exhausts its cash reserves. Much like your cash burn, a negative runway is a wonderful sign that your business keeps growing its cash reserves .
Gross Margin: Gross margin is really a percentage that demonstrates the total revenue of your business after subtracting the expenses connected with creating and selling your enterprise’ products. This can be a helpful metric to recognize how your revenue comes even close to your costs, allowing you to make changes accordingly.
Customer Acquisition Cost: By knowing how much you spend on average to get a new customer, it is possible to tell how many customers you need to generate a profit.
Customer Lifetime Value: You should know your LTV to enable you to predict your future revenues and estimate the full total number of customers you need to grow your profits.
Break-Even Point:How much do I need to generate in sales for my company to generate a profit?Knowing this number will highlight what you ought to do to turn a income (e.g., acquire more clients, increase rates, or lower operating expenses).
Net Profit: This can be a single most important number you should know for your business to be a financial success. If you aren’t making a profit, your organization isn’t likely to survive for long.
Total revenues comparison with previous year/last month. By tracking and comparing your overall revenues over time, you’ll be able to make sound business choices and set better financial targets.
Average revenue per employee. It is important to know this number so as to set realistic productivity ambitions and recognize ways to streamline your business operations.
The next checklist lays out a suggested timeline to deal with the accounting functions that may continue to keep you attuned to the procedures of your business and streamline your taxes preparation. The accuracy and timeliness of the amounts entered will affect the key performance indicators that drive business decisions that require to be made, on an everyday, monthly and annual basis towards profits.
Daily Accounting Tasks

Review your daily Cashflow position which means you don’t ‘grow broke’.
Since cash is the fuel for your business, you won’t ever wish to be running near empty. Start your day by checking the amount of money you have on hand.
Weekly Accounting Tasks

2. Record Transactions

Record each transaction (billing buyers, receiving cash from buyers, paying vendors, etc.) in the correct account daily or weekly, depending on volume. Although recording dealings manually or in Excel linens is acceptable, it really is probably simpler to use accounting software program like QuickBooks. The huge benefits and control far outweigh the cost.

3. Document and File Receipts

Keep copies of most invoices sent, all income receipts (cash, check and charge card deposits) and all cash repayments (cash, check, charge card statements, etc.).

Start a vendors document, sorted alphabetically, (Sears under “S”, CVS under “C,”and many others.) for easy access. Create a payroll record sorted by payroll date and a bank statement record sorted by month. A standard habit is to toss all paper receipts right into a box and try to decipher them at tax period, but if you don’t have a small level of transactions, it’s easier to have separate documents for assorted receipts kept arranged as they come in. Many accounting software systems let you scan paper receipts and avoid physical files altogether

4. Review Unpaid Expenses from Vendors

Every business must have an “unpaid vendors” folder. Keep a record of each of one’s vendors that includes billing dates, amounts owing and payment deadline. If vendors offer discounts for early payment, you might want to take advantage of that should you have the cash available.

5. Pay Vendors, Sign Checks

Track your accounts payable and also have funds earmarked to pay your suppliers on time to avoid any late fees and keep maintaining favorable relationships with them. In case you are able to extend due dates to net 60 or net 90, the better. Whether you make payments online or drop a sign in the mail, keep copies of invoices dispatched and received using accounting application.