by Magu Nguru

Created on: May 24, 2008   Last Updated: May 29, 2008

Accounting: Options for your small business

One of the hardest things for small business owners is to multitask. This is especially true as the business continues to grow and the business owner retains the work of producing the product and services, marketing the products and services, monitoring every additional employee that comes in and finally keeping a tight control on the finances; the cash that comes in and goes out.

Normally what happens is that the business owner is unable to do all these tasks and soon starts neglecting some activities that he assumes to add no value to the income of the business. The first task to be neglected is keeping a daily record of all expenses and incomes of the business or rather a ledger in basic accounting terminology. The business owners normally find this rudimentary time consuming exercise mundane and unnecessary and soon have no clue how much their business is worth, whether its making a profit or loss and worse still, if they are drawing from their personal kitty to support the business since they have mixed personal expenses with the business. Soon the business collapses and the business owners are even oblivious of how it even happened.

Since, as proven above, accounting is a necessary evil' for any small business; it is advisable to consider various alternatives of how to ensure that the mundane task is done to guarantee the future growth of the company. The first option is to discipline yourself every day, whether on a small note book, or on a computer, to note every cash expenditure and income you make as it happens. That way when anything goes not as per planned, it will be possible to trace exactly what happened and therefore correct it. Another option is to demand for receipts for every transaction you make and at the end of every day go over the receipts so that you can have an idea of all that has happened in the day. Soon the exercise will become part of your daily routine and even enjoyable as you watch the business grow by every little step and observe the impact of every small financial decision you make.

If indeed you find the compiling process tedious, you can hire an accountant who will come every end of the week or month to tabulate all your receipts and other documents to give you the basic financial reports starting with a cash flow statement of the business and the profit and loss statement for the month. Thereafter, you can even allow the accountant to make an inventory of your stocks and machinery

• 1
• 2
• Next Page >>