One might be led to believe that profit is the main objective in a business but in reality it’s the dollars flowing in and out of a business which keeps the doors open. The concept of profit is considerably narrow and only looks at expenses and income at a particular point in time. Cash flow, on the other hand, 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 enough time of which the movement of the money takes place. Profits usually do not necessarily coincide with their associated income inflows and outflows. The net result is that funds receipts often lag cash payments and while profits may be reported, the business enterprise may experience a short-term cash shortage. For this reason, it is essential to forecast cash flows as well as project likely revenue. In these terms, you should understand how to convert your accrual earnings to your cash flow profit. You need to be able to maintain enough cash readily available to run the business, however, not so much as to forfeit possible earnings from different uses.

Why accounting is needed

Help you to function better as a business owner

Make timely decisions
Know when to hire a team of employees
Discover how to price your products
Discover how to label your expense items
Helps you to determine whether to expand or not
Supports 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 check with CPA or accountant
What is the best way and how often to contact
What experience do you have in my industry?
Identify what is my break-even point?
Can the accountant measure the overall value of my business
Is it possible to help me grow my enterprise with profit planning techniques
How can 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 simple fact. But turning a profit is simpler said than done. So that you can boost your bottom line, you must know what’s going on financially at all times. You also need to be committed to tracking and comprehending your KPIs.
Do you know the common Profitability Metrics to Track running a business — key performance indicators (KPI)

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

Outstanding Accounts Payable: Spectacular accounts payable (A/P) shows the total amount of cash you now owe to your suppliers.
Average Cash Burn: Average income burn is the rate of which your business’ cash balance is going down on average every month over a specified time frame. A negative burn is a wonderful sign because it indicates your organization is generating dollars and growing its money reserves.
Cash Runaway: If your organization is operating baffled, cash runway helps you estimate how many months it is possible to continue before your business exhausts its cash reserves. Much like your cash burn, a poor runway is a superb sign that your business is growing its cash reserves.
Gross Margin: Gross margin is a percentage that demonstrates the total revenue of one’s business after subtracting the expenses connected with creating and selling your company’ products. This is a helpful metric to recognize how your revenue comes even close to your costs, letting you make changes accordingly.
Customer Acquisition Cost: By knowing how much you spend on average to get a new customer, it is possible to tell how many customers you have to generate a profit.
Customer Lifetime Value: You must know your LTV to enable you to predict your future revenues and estimate the full total number of customers you need to grow your profits.
Break-Even Point:How much do I have to generate in revenue for my company to create a profit?Knowing this number will highlight what you should do to turn a revenue (e.g., acquire more clients, increase prices, or lower operating expenses).
Net Profit: This is the single most important number you need to know for your business to become a financial success. If you aren’t making a profit, your organization isn’t likely to survive for long.
Total revenues comparison with previous year/last month. By monitoring and comparing your overall revenues over time, you can make sound business decisions and set better financial objectives.
Average revenue per employee. It is important to know this number to help you set realistic productivity targets and recognize ways to streamline your business operations.
The following checklist lays out a advised timeline to take care of the accounting functions which will retain you attuned to the operations of one’s business and streamline your tax preparation. The precision and timeliness of the amounts entered will affect the key performance indicators that drive organization decisions that require to be made, on a daily, monthly and annual basis towards profits.
Daily Accounting Tasks

Review your daily Cashflow position so you don’t ‘grow broke’.
Since cash is the fuel for your business, you never desire to be running near empty. Start your day by checking the amount of money you have on hand.
Weekly Accounting Tasks

2. Record Transactions

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

3. Document and File Receipts

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

Start a vendors record, sorted alphabetically, (Sears under “S”, CVS under “C,”etc.) for easy access. Create a payroll record sorted by payroll time and a bank statement record sorted by month. A standard habit is to toss all paper receipts into a box and try to decipher them at tax period, but unless you have a small level of transactions, it’s easier to have separate data files for assorted receipts kept organized as they come in. Many accounting software systems let you scan paper receipts and avoid physical files altogether

4. Review Unpaid Expenses from Vendors

Every business should have an “unpaid suppliers” folder. Keep a record of each of your vendors which includes billing dates, amounts credited and payment due date. If vendors make discounts available for early payment, you really should take advantage of that should you have the cash available.

5. Pay Vendors, Sign Checks

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