One often overlooked aspect of starting a small business is choosing an accounting system. If you are a business owner, you may have a lot of questions about what accounting system to choose.
There is not one system or option that works for all. Although an accountant might tell you what you should choose, that is only their opinion. It is your business and your choice. Consider the information below and then determine what you think will work best for you.
An accounting system is a system that tracks your business transactions, starting with what happened in your business bank accounts. At a minimum, an accounting system provides a profit & loss statement. Some accounting systems provide more financial reporting and information than the profit & loss statement, such as a balance sheet, cash flow statement, and other reports.
Even if the accounting is done one paper or in a spreadsheet, some kind of accounting system is necessary. At a minimum, you need to put the numbers together for taxes. If you use a system throughout the year, you get two main benefits as a business owner:
- Tax season is much easier because your numbers are already together and you won’t be scrambling to figure out what they are.
- You benefit from knowing what your business net profit is all throughout the year, so you can make timely and informed decisions all year long.
The key is choosing an easy to use accounting system, one that you understand and that provides you with valuable, satisfying information.
A profit & loss statement is a business accounting statement that shows you the profit or loss of your business for a period of time, such as a month, quarter or year. It shows your business revenues and expenses.
Revenues are payments you received for selling products or providing services. Money you put into the…
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