One might be led to believe that profit may be the main objective in a small business but in reality it’s the dollars flowing in and out of a small business which keeps the doors open. The idea of profit is fairly narrow and only talks about expenses and income at a certain point in time. Cash flow, alternatively, is more dynamic in the sense that it’s concerned with the movement of money in and out of a business. It is concerned with the time of which the movement of the money takes place. Profits do not necessarily coincide making use of their associated money inflows and outflows. The web result is that money receipts often lag cash payments even though profits may be reported, the business may experience a short-term income shortage. For this reason, it is essential to forecast cash flows and also project likely gains. In these terms, it is important to discover how to convert your accrual profit to your money flow profit. You should be in a position to maintain enough cash readily available to run the business, but not so much concerning forfeit possible earnings from some other uses.

Why accounting is needed

Help you to operate better as a business owner

Make timely decisions
Know when to hire a team of employees
Learn how to price your products
Know how to label your expense items
Allows you to determine whether to extend or not
Helps with operations projected costs
Stop Fraud and Theft
Control the biggest problem is internal theft
Reconcile your books and stock control of equipment
Raising Capital (assist you to explain financials to stakeholders)
Loans
Investors
What are the Best Practices in Accounting for SMALLER BUSINESSES to address your common ‘pain points’?
Hire or consult with CPA or accountant
What is the simplest way and how often to contact
What experience do you have in my industry?
Identify what’s my break-even point?
Can the accountant assess the overall value of my business
Is it possible to help me grow my business with profit planning techniques
How will you help me to get ready for tax season
What are some special considerations for my particular industry?

To succeed, your company must be profitable. All your business objectives boil down to this one inescapable fact. But turning a profit is simpler said than done. In order to boost your bottom line, you need to know what’s going on financially constantly. You also have to be committed to tracking and understanding your KPIs.
Do you know the common Profitability Metrics to Monitor running a business — key performance indicators (KPI)

Whether you choose to hire an expert or do it yourself, there are some metrics that you need to absolutely need to keep track of at all times:

Outstanding Accounts Payable: Outstanding accounts payable (A/P) shows the balance of cash you presently owe to your suppliers.
Average Cash Burn: Average dollars burn is the rate at which your business’ cash balance is going down on average each month over a specified time frame. A negative burn is an excellent sign because it indicates your organization is generating funds and growing its funds reserves.
Cash Runaway: If your business is operating baffled, cash runway can help you estimate how many months you can continue before your business exhausts its cash reserves. Much like your cash burn, a poor runway is a good sign that your business is growing its cash reserves.
Gross Margin: Gross margin is really a percentage that demonstrates the full total revenue of one’s business after subtracting the costs connected with creating and selling your enterprise’ products. It is just a helpful metric to recognize how your revenue compares to your costs, letting you make changes accordingly.
Customer Acquisition Cost: By focusing on how much you spend typically to get a new customer, you can tell how many customers you must generate a profit.
Customer Lifetime Value: You need to know your LTV so that you can predict your future revenues and estimate the full total number of customers it is advisable to grow your profits.
Break-Even Point:How much do I have to generate in product sales for my company to generate a profit?Knowing this number will show you what you should do to turn a earnings (e.g., acquire more buyers, increase rates, or lower operating expenses).
Net Profit: This is actually the single most important number you should know for your business to be a financial success. If you aren’t making a profit, your organization isn’t going to survive for long.
Total revenues comparison with final year/last month. By tracking and comparing your complete revenues over time, you’ll be able to make sound business decisions and set better financial ambitions.
Average revenue per employee. It is critical to know this number to help you set realistic productivity aims and recognize methods to streamline your business operations.
The next checklist lays out a recommended timeline to deal with the accounting functions which will preserve you attuned to the functions of one’s business and streamline your taxes preparation. The reliability and timeliness of the amounts entered will affect the key performance indicators that drive organization decisions that need to be made, on an everyday, monthly and annual basis towards profits.
Daily Accounting Tasks

Review your daily Cash flow position which means you don’t ‘grow broke’.
Since cash may be the fuel for your business, you never want to be running near empty. Start your day by checking how much cash you have on hand.
Weekly Accounting Tasks

2. Record Transactions

Record each transaction (billing customers, receiving cash from buyers, paying vendors, etc.) in the correct account daily or weekly, depending on volume. Although recording transactions manually or in Excel linens is acceptable, it really is probably easier to use accounting program like QuickBooks. The benefits and control far outweigh the price.

3. Document and File Receipts

Keep copies of all invoices sent, all funds receipts (cash, check and charge card deposits) and all cash payments (cash, check, credit card statements, etc.).

Start a vendors file, sorted alphabetically, (Sears under “S”, CVS under “C,”and so on . ) for easy access. Develop a payroll file sorted by payroll day and a bank statement file sorted by month. A common habit would be to toss all paper receipts right into a box and try to decipher them at tax moment, but if you don’t have a small volume of transactions, it’s better to have separate documents for assorted receipts kept arranged as they can be found in. Many accounting software systems enable you to scan paper receipts and steer clear of physical files altogether

4. Review Unpaid Expenses from Vendors

Every business should have an “unpaid vendors” folder. Keep a record of each of one’s vendors which includes billing dates, amounts owing and payment due date. If vendors make discounts available for early payment, you might like to take advantage of that if you have the cash available.

5. Pay Vendors, Sign Checks

Track your accounts payable and also have funds earmarked to pay your suppliers on time to avoid any late fees and keep maintaining favorable relationships with them. Should you be able to extend due dates to net 60 or net 90, the higher. Whether you make payments on-line or drop a sign in the mail, keep copies of invoices dispatched and received using accounting computer software.