What can you expect in Accounting as a Beginner Entrepreneur?
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Being an entrepreneur is not easy and one thing that scares small businesses is accounting. “Ah the dreaded accounting” they might say. Sure, accounting might not be the most interesting thing when it comes to business, and it might be a little intimidating, but it is safe to say that no business can function without the tools accounting offers (that is, if you want to stay in business).
The generic definition for accounting from Investopedia is that “Accounting is the process of recording financial transactions pertaining to a business. The accounting process includes summarizing, analysing, and reporting these transactions to oversight agencies, regulators, and tax collection entities.” In a nutshell, it is all the financial dealings and information of your business.
It is intuitive that when starting a business, you’re playing to your strengths. If you are good at marketing, that is where the strength in your company lies. Therefore, some companies choose to outsource their accounting function to professionals. If knowing that fact is helpful you should probably check for more information at accountants Ringwood. Regardless of who does the accounting, the things that you must do remain the same. So let us have a look at what they are.
Things you should know about accounting as an entrepreneur.
If you are in the business of making money, it is vital that you keep a record of all the transactions, incomes, expenses and so on; simply, you should maintain an income statement. How you choose to record this data is up to you. It can be an actual book used as a ledger, but we are in the 21st Century so there are infinitely more convenient solutions from dedicated application to excel document or google sheets. Start the practice from the very beginning and, if you are doing it by yourself, you can hire an accountant to see if you are doing everything right. Having accurate and timely data will save you a lot of time, money, and energy in the long run.
Just as important as the income statement is a balance sheet. It records the assets, liabilities, and capital of your business. This is a document that is essential if you’re applying for banking services or talking to investors. You can also use it as the document to see where you are as a business financially,
Finally, the annoying (yet important), taxes. The topic is so large and complicated that it deserves an article of its own. But yes, taxes are a thing, and you need to pay them. Planning for it from the very beginning can save you a lot of headaches as well. How you do your taxes largely depends on what kind of a business you are. Some businesses are required to do their taxes with the intervention of a third party. If you are a growing business, consulting an accounting firm about the laws and tax policies can be beneficial.
There are so many other things to consider but you do not need to learn them all at once. As always, do your research and break down what you want to learn in a need-to-know basis, and it will be very easy to manage. In any case, Godspeed for all your business endeavours.