According to statistics, close to 1 million people will start a small business in the U.S. Unfortunately, at least 400,000 (40%) of those businesses will fail within the first year and more than 800,000 (80%) of them will be out of business within 5 years and 960,000 (96%) will have closed their doors before their 10th year in business.
The two key ingredients to help insure the success of any business are marketing and accounting. Marketing is extremely important because this is how you are going to acquire your clients. Accounting on the other hand will let you know if your business is making or losing money because if you're a business owner, you need to know the score at all times. Where does your company financially stand today at any given moment? Generating lots of sales with no clue as to the financial position of your company is the same thing as saying we're lost but we're making great time.
Accounting must be approached as one of the most important pieces to the business puzzle and not as an afterthought. If more people were to make accounting a priority, the success rate of most small business would go through the roof!
Start right from the beginning and purchase an accounting software program that's going to work for your business. Getting on board early on with an accounting software program can save you hundreds if not thousands of dollars not to mention saving you countless hours of valuable time. Remember, time is the most precious commodity in the world!
The number one accounting software program on the market today is QuickBooks, however, there are now 18 different QuickBooks flavors to choose from. Not only that, QuickBooks may or may not be the right software for your business. Don't be a sheep. Just because your friend or someone you know recommends an accounting software program doesn't necessarily mean it is right for your business. The most important thing to remember is to make your accounting software fit your business and not the other way around which is what a lot of people do.
It's amazing to see how many people take it upon themselves to all of a sudden become their own accountant. If you don't have a clue about accounting, hire an accounting consultant to help you get started. Doing it right from the start will save you a small fortune not to mention saving you a lot of time, grief and aggravation.
If your business is already running an accounting software program, it is highly advisable to have an accounting consultant check everything, especially if the program was setup by a non-accounting professional. An accounting professional can not only help determine whether or not your accounting software is adequate for your business, they can also review it to make sure it is setup properly and check for any existing errors in the system.
Imagine that you just purchased a brand new state of the art computer where you set it up and installed all the software yourself. You're not an IT person but your computer is running just fine. A year goes by and one day the computer breaks so you bring in a tech to fix it. During the repair the tech discovers the computer was never set up for its optimum speed so he tweaks it and now your computer's operating at 4x's its original speed! How much time do you think you lost by not having it setup properly?
If you're not using any accounting software and only operating out of your checkbook and/or using a spreadsheet program, you could be missing the boat big time by not being able to quickly and accurately obtain the crucial financial information your business needs.
The advantage of using accounting software is having detailed financial data at your fingertips so you can determine the financial health of your business on the fly. Accurate financial records can also make the difference between getting that line of credit or loan that is crucial to the survival of your business or not getting the financing you need to keep your doors open.
It's also about being in control of your finances. Why wait to know where you stand financially. Imagine being able to run accurate financial reports any time you want. Clicking a few buttons in order to generate the data your CPA needs to complete your company's taxes instead of you having to spend countless hours, days or weeks rummaging through receipts and mountains of paperwork. Wouldn't you rather be doing something enjoyable with the extra time you save instead?
As a business owner, it is extremely important to know how to read financial statements such as the profit and loss statement and the balance sheet. You will be amazed at how little time and effort it takes to become financially literate and to understanding financial reports.
You can always outsource your bookkeeping to a bookkeeping service but just because someone else is managing your books for you doesn't exclude you from understanding accounting basics. Checks and balances also need to be put in place to help keep honest people honest. One of the greatest advantages of having someone else manage your books is that you now have more time to focus on growing your business.
To Sum Things Up:
Your business' accounting is very important and should never be neglected.
Make sure your accounting software fits your business and not the other way around.
If you need help, hire an accounting professional to help you get on track.
It pays to have some basic accounting knowledge to better understand the financial health of your business.
Outsourcing your bookkeeping can allow you to spend more time growing your business.
For FREE valuable QuickBooks Tips and Tricks, you'll want to go to ExactAccounting.com
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