Why is Accounting Important?
Obviously, accounting is important because you want to know if your business is making a
profit. Also, the small business owner wants to be able to look at sources of income and expenses
and make decisions based on that information. Using accounting software, the business owner
can generate reports on “profit and loss”, “cashflow”, the “balance sheet” and dozens of other
reports that can help him/her get an overall picture of how the business is doing now or in the
Also, many Federal and State forms require tracking of money for sales taxes, payroll and
income tax purposes. In fact, a good accounting system can make the filing of these government
forms much easier and less time consuming.
How do I Setup My First Accounting System?
If you are not financially-inclined, we sometimes recommend you speak to an accountant or
bookkeeper, especially when initially setting up your accounting system. This way, they can help
your setup your accounting system properly the first time so you don’t make mistakes that will
need to be corrected later in the year when filing taxes or other government forms.
Pick an Accounting Method
- The Cash Method
- The Accrual Method
Setup Your “Chart of Accounts”
- Open a business banking account
- Learning and Maintaining Your Accounting System
- Set up a system to collect payments
- Create a payment collection process
- Select a payroll provider