Accounting is one of the most important aspects of a business. And yet, it is also the least understood. A lot of people go around saying that they don’t have a “head for numbers.” It’s perfectly acceptable nowadays to say something like this.
Developing a “Head for Numbers”
If you don’t have a head for numbers, then how are you going to make a profit? How are you going to make sure that the money coming in is more than the money going out? In order to do this, it’s very important to keep track of your cash flow. Yes, you can hire an accountant to do this or even outsource your accounting tasks. However, at some level, you’re going to have to develop a “head for numbers” if you’re going to run a business.
Addition, Subtraction, Multiplication and Division
In order to run a business, you don’t need to know calculus or trigonometry. Just plain addition, subtraction, multiplication and division are enough, as long as you perform these tasks accurately and painstakingly. You don’t even have to do them manually; everyone has access to a calculator. But the point is to use it.
Keeping Track of Money Coming In and Going Out
At the end of the day, sit down and make sure you count all the money that came in and the money that went out. In some businesses, you may only have to do this once a week while in still other businesses, you’ll have to do it once a month.
Staying Involved with the Accounting Aspect
While your business is still at the small business stage, you’ll probably be able to keep track of cash flow yourself. Once it gets bigger, you may need to hire an accountant or an accounting firm. The point is to keep an eye on what’s going on financially within your business. And although you can outsource this function to someone else, you’re still going to have to stay involved by looking over that other person’s work once in a while.
Contact us to learn more about common business accounting mistakes.