15760 Ventura Blvd, Suite 610 Encino, CA 91436
15760 Ventura Blvd, Suite 610 Encino, CA 91436
Personal, Affordable Payroll Services, Bookkeeping, and Tax Processing for Small Business throughout Los Angeles County.

Small Business Accounting: What You Need to Know

Small business accounting partner - Accounting Taxes Payroll Partners.

Small business owners may enjoy some success because they are masters at their own particular line of business. However, the best companies risk their futures if they don’t learn how to manage cash flow.

Bookkeeping lies at the heart of managing the way that money flows in and out of a business. This is one of those chores that typical small business owners would rather avoid, but attention to this important task can make the difference between success, stagnation, or even failure.

The Basics of Small Business Accounting

Even if you hire a bookkeeper to keep records straight, you need to understand the basics of small business accounting in order to make sure you can maximize profits and have plenty of money to pay the bills! In order to understand your reports, be sure you are familiar with these bookkeeping basics:

• Cash flow

Most bookkeeping systems use separate entries to keep track of incoming and outgoing cash. The most basic task for any small business accounting system is to help owners and managers understand revenues and expenses.

• Inventory stocks

If you have products ready to sell, these products all have value that you intend to convert into revenue. You need to account for your inventory, just like you account for your money, and you should probably reconcile your actual, physical inventory with your records periodically.

• Receivables

This part of small business accounting helps you track money that customers owe you. You may need to send out invoices, payment reminders, or take other measures to turn these receivables into revenue.

• Payables

Of course, your business also has expenses that you need to track and remember to pay on time. If you have good records of what you need to pay, you can manage these expenses much better.

• Loan payments

If you have borrowed money, you also have loan repayment obligations that you need to account for. Proper credit management makes a big difference in the cash flow of companies.

• Revenues

Certainly, you need to account for all sales that you make. It’s critical to have a way to spot sales trends and understand if previous efforts have helped increase your revenue.

• Purchases

In order to understand the cost of your inventory or the products you produce, you need to keep records of everything that you buy.

• Payroll

If you have employees, you certainly need to pay them. You may also need to make payments for payroll taxes and also meet certain reporting requirements.

• Owner equity

This records the stake that each business owner holds in the business. It’s important to track this for small businesses with multiple owners. In addition, some lenders will want to know how large of a stake that owners have in the business.

• Retained earnings

While owners may take out some profits as payment for all of their hard work, some profits may get rolled into the business in order to help with cash management or to pursue chances to grow. It’s important to track this, and lenders or investors may also be interested in this sort of information.

Succeed With a Small Business Accounting Partner

Do you need a trusted small business accounting partner to help you manage your bookkeeping? If so, contact Accounting Taxes Payroll Partners at 818-436-2775 to learn how we can help.