Accounting is essential to every business man who is willing to go far in developing your investment. I am also assuming that you are starting a simple, sole proprietorship business where you take more like a hobby than a business but still you need to control it with account to develop it further. You should do well if you open a separate checking account just for your business, and keep all business finances separate from your personal finances. Separating the business part of finances from personal issues give it a chance to grow. It will be better to spend your personal in business matters for it counts to be more beneficial to you and your business.
The word accounting makes many take it like it’s a very complicated things but it’s not so, this is the best thing if followed from basics in business records. When the business is small one can keep records and do count the basics about profits from sales in an easier way but at some cases when the business grow wide you need to look for the qualified person who will count on your business development.
For a beginner, accounting is not complicated especially when you subdevide them in three basic financial statements which you need to understand to run your business. Every action you take creates an action in your books that are kept according to group. These groups are buying or purchasing records,Sales records and stock records. Worksheet has this main three column that is a comparison of your assets which are things that make you money on the left, and liabilities which are things that you owe and equity which are the net worth of your business. These comprises assets that are in solid form and those in liquid forms, liabilities and full stock of business in net. Fixed asset are the more expensive, usually tangible items that you purchase for your business while current are those which are easily dismissed. Assets should be appreciating by time to avoid loses. Equity is the money that you have personally invested in your business and the retained earnings from your business. When you add up your assets, the total must equal the total of liabilities + equity.
The second and probably most important financial statement is the Income Statement which is the full income from all activities at a specified time. I encourage you to prepare one at least once a month to keep up on where you stand profit-wise. That the supplies or products you sold cost you to purchase or manufacture. Other expenses on sales and marketing. The full profit without any deductions. Net Income . The third financial form that you should prepare on a regular basis, at least weekly, is a cash flow statement. The update of the business can be of no importance if the bookkeeping and accounts record are not well recorded.