Accounting for a small business entails the periodic tracking, recording and analyzing of your business’ transactions in order to keep track of your business’ performance and expenses. The most basic principles for accounting when it comes to small businesses or startups encompasses the understanding of your business’ balance sheet, the P&L statement, and the cash flow statements. Thus, accounting entails the recording of financial information from your financial records/documents and analyzing the gathered data to gain insights regarding the business’ performance and tracking the expenses therein.
Accounting can be done manually, through an accountant or by leveraging accounting software and tools. In a similar vein, financial basics come down to your understanding of the main money management activities in your business which range from forecasting, investing, budgeting and borrowing. Understanding the accounting and financial basics of your small business goes a long way in boosting your bookkeeping capabilities.
This checklist details the fundamentals of your business’ financials and accounting.
1 Are you familiar with your business’ revenue and expenses?
2 Have you prepared an income statement?
3 Does your cash flow statement detail the sources of income?
4 Does the balance sheet provide a snapshot of your business’ financial health?
5 Have you developed a tracking system for your expenses?
6 Have you developed cash projections for your business?
7 Do you have a bookkeeping system in place?
8 Do you keep records of your business’ financial transactions?
9 Do you have separate accounts for your business?
10 Do you understand your business’ tax obligations?
11 Have you identified your financing options?
12 Do you have a workable budget?
13 Have you compiled your profit and loss statement?
14 Do you understand the basics of a good credit score?
15 Do you have appropriate covers for your business?
16 Are your checking accounts reconciled?
17 Are you familiar with the regulatory and obligatory requirements of accounting?
18 Does your business contain a set payroll system?
19 Do you keep track of your business inventory?
20 What are your payment terms?
21 Are you monitoring your books?
22 What are appropriate financial habits for your business?
23 Are you optimizing accounting software and tools?
24 Are your business debts controlled?
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