Why every small business deserves proper accounting management?
by Masturah Mohamed
3 November 2020
Every small business is a labour of love and an evidence of pure human endeavour. To ensure that the business is at peak success, the company needs a good accounting system. An accounting system is how a business plans its operating budgets and tracks its income and expediture as well as its receivables and payables. The collation and processing of these data helps owners, managers, investors and other stakeholders in the business evaluate business performance. Accounting provides important information about cost and earnings, profit and loss, liabilities and assets for decision making, planning and controlling processes within a business. Business owners need to plan how they allocate their limited resources including labour, equipment and cash towards accomplishing the objectives of the business; and without a good accounting system in place, a business may fail as decisions may be made contrary to a small business’ financial capabilities. Unfortunately, most business owners are trained in their trade or profession and are not very well versed with finance and that's where we come in.
Why your small business need managerial accounting
by Masturah Mohamed
27 October 2020
Running a small business is a very busy lifestyle choice with the founder fulfilling most of the business functions ranging from marketing to operations as well as administrative filing and finance. So most business owners will I ask, "Why does a small business like mine need managerial accounting? or What is managerial accounting?"
Managerial accounting is the process of identifying, measuring, analyzing, interpreting and communicating information in the pursuit of a business' goals.
Managerial accounting can help your business in the following ways:
a. Forecast the future performance of your business
b. Make or buy decisions
c. Forecast cashflows and impacts of cashflow
d. Close performance gaps with variance analysis
e. Analyse the rates of returns
To get acquainted with results, get acquainted with managerial accounting.
If you need advice, please contact us for a no-obligations fuss free consultation.
Cloud accounting software for small businesses
by Masturah Mohamed
20 October 2020
Keeping business accounting records is a basic responsibility for every business owner. Startups and small business owners typically spend a lot of time concentrating on growing their business, marketing and reaching larger audiences. The business owners, typically the "jack of all trades" normally lack any proper training in accounting and bookkeeping and use multiple paper forms and excel sheets to track their business performance. Aggregating these various data across various platforms at the end of a financial period may be a mammoth task that can cause stalls in the other business functions.
Streamlines business processes
Business owners need to streamline the recording processes and documentations so that more focus can be transposed on to the business functions. One easy way is via cloud accounting applications where data management and information collation can be automated.
Ease of use and Level of support
For accounting novices, the main criterion is the ease of use and the level of support provided by the software firm. Most cloud accounting software come with a pre-loaded generic chart of accounts that may work for small businesses. Business owners also can contract this function to a firm to formulate and upload a customised chart of accounts for them.
Ease of access
The next criterion is the ease of access. Small business owners manage most, if not all of the functions in their businesses. If invoicing and the checking for the vital statistics of their financial performance can be done offsite, it buys the business owner not just extra hours, allowing them to use travelling and waiting times for business via apps through their mobile devices.
Put all your cash management tools and apps in one place. Ensure the cloud accounting software is able to speak with your point-of-sales system, inventory management system, payroll system, website check-out system as well as your customer relationship management system. This will greatly reduce the amount of data-entry that you will need to do. Some accounting software also allow for supplier invoices to be scanned in so that data-entry is kept to the minimum.
Meets the needs of the business owner
Having the accounting done in-house will allow the business owner access to management accounting functions. Business owners may want to explore dashboards provided by the cloud accounting software. Also ensure if you are able to extract the report you need.
Principles and Importance of Accounting for a Business
by Osmond Vitez
Organizations often need a way to keep score when conducting business operations. Accounting usually fits this need because it allows companies to create financial reports that can be compared with other companies or an industry standard. Business owners and managers also use accounting to review the efficiency of operations. This information may help owners and managers make business decisions and improve the company’s profitability.
Two types of accounting methods exist in the business environment: cash basis and accrual. The cash basis method recognizes and records financial transactions when cash changes hands between parties. Accrual accounting recognizes and records financial transactions as they occur, regardless of when cash changes hands during the transaction. Smaller businesses often use cash basis accounting because it is an easier accounting method. Larger companies commonly use accrual accounting because it is required in many industries and by government agencies.
An important feature of cash basis accounting is that it keeps an accurate record of the company’s cash flow. This record ensures companies have enough capital to pay normal business operating expenses. However, cash basis accounting does not maintain an accurate record of sales trends. Although accrual accounting creates better trends for reviewing and analyzing sales trends or other financial performance, companies may lose track of their cash balances. To rectify this situation, companies usually prepare a statement of cash flows.
Companies often use a mix of management and financial accounting in their business operations. Management accounting is responsible for tracking internal business costs than allocating these costs to goods or services produced by the company. Management accounting may also be responsible for forecasting future sales and creating budgets to manage expenditures. Financial accounting is the process of creating financial statements based on the company’s financial information. These financial statements may be used by internal or external business stakeholders for making business or investment decisions.
Using an automated accounting management system may help companies keep track of the financial information. Several programs can be tailored to small businesses or major corporations. These programs allow companies to generate electronic accounting reports that can be manipulated easier than traditional manual accounting reports. Companies may also be able to transfer this information electronically to their professional accountant for his review.
Public accounting firms or individual certified public accountant (CPA) consultants provide professional accounting services in the business environment. These individuals’ help companies create accounting systems and prepare business tax returns. They may also provide audits to review the company’s accounting system and give the business guidance and taking corrective measures. Smaller businesses may need more accounting consulting services to ensure they get off to the right start when recording and presenting financial information.
This article first appeared in Chron.com. Please visit this link for the original article.