Having knowledge of simple business accounting techniques can be of great help to new entrepreneurs. Accounting is often ignored by many business owners, which is why companies fail in keeping track of financial records (and hence the business doesn't prosper). Here are some simple business accounting techniques for new entrepreneurs.
Familiarize Yourself with Rules and Regulations
Different countries follow different rules and regulations regarding business accounting. Hence, before making the start into business, it is necessary to be aware of the rules and regulations in the country where the business is carried out.
Get Acquainted with Business Knowledge
For any entrepreneur, it is essential that they gather sufficient knowledge about business tactics. Gathering enough knowledge of accounting and computer software can help in clearly explaining the accounting needs to different acquaintances like bankers, accountants or employees. Knowledge of financial tools like balance sheets, cash flow statements, profit and loss statements and their usages is also an absolute necessity.
Maintain Accurate Records
Maintaining accurate business records and keeping track of them is one of the most important tasks in improving the business. This helps in being aware of how the different areas of business are doing, and therefore the areas which need to be improved can be taken into immediate consideration.
Maintain a Separate Business Account
Set up a separate business account for managing the finances of the business. Using the same account for personal as well as business purposes complicates matters. Having separate accounts for business needs helps in managing taxes and profits, and the growth of the business can be easily tracked. Make sure that all the business profits collect in the business account, and avoid spending business revenue on any personal expenses.
Choose the Appropriate Means of Accounting
For tasks related to accounting, one can either hire an accountant or use the accounting software package. Hiring an accountant can ensure timely maintenance of records, and therefore help in filing taxes on time thereby reducing penalty. This is beneficial when the company is making enough profits, while it can be expensive for very small businesses.
Using accounting software packages requires an initial set up and training. There are different types of accounting packages to suit the needs of different types of business. Small businesses often require a simple book keeping accounting package, which has provisions for entering details like sales, expenses, purchases and bank transactions. Large businesses need a more detailed accounting package.
Alternatively, one can even hire a part-time book-keeper or a freelancer or outsource the accounting to an accounting firm. Deciding what is best for the company is one of the important factors.
Fix Your Salary
Fix a salary for yourself either as a fixed amount or as a percentage amount. When the business profit is not steady, choosing a percentage amount can be a better option. Fixing the salary avoids the unnecessary spending of the business's revenue on personal needs.