SCORE Small Business Blog

The Art of Accounting for Your Small Business
8 Comments

If there’s one mistake that can make or break your startup from the get-go, it’s failing to adequately understand the art of accounting. If you’re sighing “Boring” right now, then you really need to read on.

Neglecting to maintain proper accounting records can lead to a host of problems for a startup, from getting dinged by Uncle Sam for not paying taxes on time or in full, getting a bad reputation with vendors for paying late, or, in the worst-case scenario, running out of money altogether—and running your business into the ground.

If you know little or nothing about accounting, all is not lost. There’s never been an easier time to learn. Here are three steps to put you on the right path.

Take a course. Even if you use an outside accountant or have a bookkeeper in your business, as the business owner, you need to understand basic accounting principles yourself. Check out local community colleges, adult education programs, or your local SCORE office for help learning the basics of small business accounting.

Make it automatic. There are many good accounting software programs available to simplify and streamline the accounting process. What’s more, they make it easy to manipulate the numbers in different ways so you can keep track of key information like your sales, expenses and cash flow at a glance. Work with your accountant to choose the right accounting software package for your business.

Keep it up. Like an exercise program or a garden, your accounting system needs to be maintained regularly or you’ll soon find yourself in trouble. Set regular times to input and update data each week, and it will stay manageable. Delay or put off doing so, you’ll end up playing catch-up and potentially making some costly mistakes.

If accounting isn’t your strong suit, don’t feel bad—plenty of startup business owners are weak in this area. Do something about it by contacting the mentors at SCORE. Visit the SCORE website to get matched with a mentor who can help you get a grip on your small business bookkeeping—and help your business grow.

Rieva LesonskyCEO, GrowBiz Media
Rieva is CEO of GrowBiz Media, a content and consulting company specializing in covering small businesses and entrepreneurship. She was formerly Editorial Director of Entrepreneur Magazine and has written several books about small business and entrepreneurship.
www.growbizmedia.com | @rieva | More from Rieva

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Discussion (8) Comment

  1. Thanks for clearly depicting every little detail about the art of accounting for small business. Your article shows the need of an accountant in the growth of a business.

  2. Obviously, every business requires different accounting understanding. I totally agree about your concept.


  3. MichaelVisitor

    Good news, The AICPA is working on a widespread small business accounting solution aimed at making it easier for small businesses to save both time and money.

  4. Being a businessman, I never took interest in bookkeeping. But I have seen its consequences.My bookkeeper was making a fool out of me, without even letting me know.So on the basis of my personal experience, I will suggest the whole business lobby to gain at least some basic knowledge about bookkeeping before handling all your accounts to a professional bookkeeper.


  5. jesses ToonsVisitor

    Thanks for sharing this article, its just what I needed to hear! I haven’t had much experience with accountants in Calgary. But my buddy told me that if I’m making as much money as I am it would be smart to get one to help me out. I think ti would probably be a good idea too.

  6. I agree with Rieva’s comments. It is important for every business owner to understand the differences between revenue, costs and profit. It is also important to understand cash flow, since the lack of attention to this could cause a business owner to miss payments to banks, employees or vendors. A good basic understanding is important, but, as with anything else, it is best to focus on what you do best, have passion for, and find the right partner you can trust to help you with the accounting aspects of your business.


  7. MicroSourcingVisitor

    A good understanding of basic accounting concepts would be helpful to startup business owners. While they can always outsource accounting to competent individuals, business owners still need to be aware of their company’s accounts.


  8. Samuel CarverVisitor

    I totally agree that everyone in business needs to have their own basic understanding of accounting. This is a great article and I’ll definitely be taking some of the advice on board.

 

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