Small Business Accounting: What Do You Need to Know?

Small business accounting is something that is important for small business owners to keep their eye on, but most of us don’t.  Something I often talk to my clients about is the accounting or financials they should have in place for their small business.  Let’s face it, as small business owners we have a lot on our plate, most of which is making sure the client gets what they want, be it a product or a service.  And sometimes, more than we’d like to think, the accounting side of our small business gets placed on the back burner.  So, I usually tell my small business clients they really need to keep their eye on their financials in order to measure where they are against where they want to be, but how?

In my mind, and keep in mind I am not an accountant, the top three financials that my small business clients should have in their accounting arsenal are a budget, an income statement and a balance sheet.  The budget is an forecasting tool used in accounting to determine what income you expect to have and what expenses you expect to have, this, in effect, gives you a goal to achieve.  Your income statement will show you what your business has as far as income and expenses during a particular time frame, usually by month.  And your balance sheet will give you a snapshot of your balances in your various accounts, including bank accounts, capital accounts, etc.

Of course, your accounting may differ from your competitor’s or even your neighbors, that does not matter so much.  What matters is that you keep an eye on the accounting you have, digest it and gain a better picture of where your business has been and where you are going.  This is why your accounting is so important.

I always tell my clients that one of the trusted advisors they should have on their team is an accountant, this is obviously to keep their accounting in check.  The accountant is in addition to their business attorney and their commercial insurance broker.  With a minimum of these three trusted advisors, your small business should be well on its way to success.

Do you keep an eye on your accounting on a regular basis?

Integrated General Counsel
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