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

Why accounting is needed

Help you to operate better as a business owner

Make timely decisions
Know when to employ a team of employees
Learn how to price your products
Understand how to label your expense items
Helps you to determine whether to expand 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 (allow you to explain financials to stakeholders)
Loans
Investors
What are the GUIDELINES in Accounting for Small 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’s my break-even point?
睡衣 assess the overall value of my business
Is it possible to help me grow my business with profit planning techniques
How will you help me to get ready for tax season
What are some special factors for my particular industry?

To succeed, your company should be profitable. All of 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 have to know what’s going on financially constantly. You also need to be committed to tracking and understanding your KPIs.
What are the common Profitability Metrics to Track in Business — key performance indicators (KPI)

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

Outstanding Accounts Payable: Excellent 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 every month over a specified time period. A negative burn is an effective sign because it indicates your organization is generating cash and growing its cash reserves.
Cash Runaway: If your business is operating baffled, cash runway can help you estimate how many months it is possible to continue before your organization exhausts its cash reserves. Similar to your cash burn, a negative runway is an excellent sign that your business keeps growing its cash reserves.
Gross Margin: Gross margin is a percentage that demonstrates the full total revenue of one’s business after subtracting the costs associated with creating and selling your company’ products. It is 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, you can tell exactly how many customers you have to generate a profit.
Customer Lifetime Value: You need to know your LTV to help you predict your own future revenues and estimate the total number of customers you must grow your profits.
Break-Even Point:Just how much do I have to generate in revenue for my company to produce a profit?Knowing this number will show you what you must do to turn a profit (e.g., acquire more buyers, increase rates, or lower operating expenses).
Net Profit: This is actually the single most important number you must know for your business to become a financial success. If you aren’t making a profit, your company isn’t likely to survive for long.
Total revenues comparison with final year/last month. By monitoring and comparing your total revenues over time, you’ll be able to make sound business choices and set better financial goals.
Average revenue per employee. It’s important to know this number to enable you to set realistic productivity ambitions and recognize methods to streamline your business operations.
The next checklist lays out a recommended timeline to deal with the accounting functions that may preserve you attuned to the functions of your business and streamline your taxes preparation. The reliability and timeliness of the amounts entered will affect the key performance indicators that drive enterprise 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 never want 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 consumers, receiving cash from customers, paying vendors, etc.) in the correct account daily or weekly, based on volume. Although recording transactions manually or in Excel bedding is acceptable, it is probably easier to use accounting application like QuickBooks. The huge benefits and control far outweigh the price.

3. Document and File Receipts

Keep copies of all invoices sent, all cash receipts (cash, check and credit card deposits) and all cash payments (cash, check, charge card statements, etc.).

Start a vendors file, sorted alphabetically, (Sears under “S”, CVS under “C,”and so on.) for easy access. Create a payroll file sorted by payroll date and a bank statement document 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 unless you have a small volume of transactions, it’s better to have separate data for assorted receipts kept arranged as they come in. Many accounting software systems let you scan paper receipts and prevent physical files altogether

4. Review Unpaid Bills from Vendors

Every business must have an “unpaid suppliers” folder. Keep a record of each of your vendors that includes billing dates, amounts owing and payment deadline. If vendors offer discounts for early payment, you really should 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 cover your suppliers on time in order to avoid any late fees and maintain favorable relationships with them. When you are able to extend payment dates to net 60 or net 90, the better. Whether you make payments on the net or drop a check in the mail, keep copies of invoices dispatched and received using accounting application.