Real World Accounting for Small Business Owners

If you're like me, you love accounting. It's so fascinating and such an ingenious system. Don't you just think that Double Entry Accounting is the most beautiful creation of all humankind?

Okay, let's get real. You probably think accounting is boring and best left to pencil pushing geeks (like me!). I mean?BOOORRRRING! Total Snooze-fest!

Well, my friend, I'm about to introduce you to Real World Accounting for Regular People. But, be careful, it just may change the way you look at accounting FOREVER! In fact, one of my clients looked up from a spreadsheet one day and said, "Wow, I never knew accounting could be FUN!" You just might have the same experience.

For starters, a lot of people think accounting is about math, which is an immediate turnoff. Although accounting does include math, it's more like a foreign language. All you need to do is learn the parts of that language that actually apply to you. Think about visiting a foreign country. You don't need to be fluent in the entire language. You just need to know the important things like what to order (or not order) in a restaurant, how to get directions, and how ask where the bathroom is. It's the same thing with accounting. You need to know what you need to know and the rest is unimportant. I mean, do you really need to know about corporate accounting practices or off shore financial transactions. Probably not.

So, how do you figure out what you need to know when you don't even know where to begin? Follow me and I'll show you!

The first thing you need to know is this. You must, must, must keep your personal finances and your business finances separate. Using your personal checkbook for all your transactions is a bad way to go. Here's why:

? The Internal Revenue Service wants to know that you have a very clear distinction between your personal affairs and your business affairs. They want details. If you try to pass off personal expenses as business expenses, you're violating tax laws. They don't like that.

? If you ever plan to borrow money for your business or get credit from your vendors, your lender or vendor will want to see detailed records of your business performance. Handing them your checkbook register is not going to make them want to give you money or sell to you on credit.

? You need to know how your company is performing at all times so you can plan ahead, make adjustments in your operations, and make informed decisions.

? The more accurate your records, the more accurate your tax return. It prevents you from missing deductions.

? It's the only way you'll know whether your business is making money or if you're just kidding yourself.

So, if you don't have a separate checking account for your business, go get one. It's easy and inexpensive and it will give you clarity on how your business is really doing.

The next step is your accounting system. Now, when I say "accounting system" I'm talking about an organized way of keeping track of your records. It can be computerized or it can be the old fashioned pencil and paper route. The important thing is that a) you have one and b) you use it.

Finding a System That Works For You

Your record keeping system needs to be designed so that it works for you. It should be:

? Simple to understand
? Flexible and adaptable to changing needs
? Inexpensive to develop and maintain
? Require little time to maintain
? Be handy and convenient to use

If you use a computerized accounting software package like QuickBooks, all those qualifications are met. I generally recommend QuickBooks to my clients because it's easy to use and you can also find local support for set up and troubleshooting. I don't whole heartedly recommend QuickBooks because I think parent company Intuit is losing touch with its core customer (we, the small business owners of the United States of America). There's too much nickel and dime-ing and poor support. But, at this point, it's still the most widely used system and certainly meets the needs of most small businesses as far as what it can do.

I do recommend that you get professional help in setting up your accounting system if you don't have an accounting background. It's a case of Garbage In Garbage Out. A well set up system will give you the best information with the least trouble. It's less expensive to have it set up right to begin with than it is to have it cleaned up later.

Whatever record keeping solution you choose for your business, the key to success is actually using it on a very regular basis. Otherwise, your business struggles and you're in constant danger of sliding into the Cash Flow Swamp.

Caroline Jordan is a small business mentor and consultant helping small business owners understand, diagnose, and improve cash flow in their businesses. For more information and resources to improve cash flow visit http://www.TheJordanResult.com/mastering.html .

In The News:

Pandemic hurts small business owner  Pine Bluff Commercial

Increase Sales in Your Home Business With These 10 Simple Ideas

Every home business has the same problem of how to... Read More

Franchisor; Ongoing Support and Ideas

Ongoing support for a franchise system is omnipotent. A major... Read More

5 Good Reasons a Self-Employed Professional Should Take Vacation

So you think you're not justified in taking time away... Read More

Restaurant Operators - What Skills do you Need

A tongue-in-cheek look at the skills required to operate a... Read More

Getting Behind in Your Work? You Need a Virtual Assistant!

If you don't know what a Virtual Assistant (or VA)... Read More

How to Write a Credit Policy for Your Business

The book, "Become the Squeaky Wheel," by New Hampshire author... Read More

Power Tools for Business

How do we keep track of our business deals?If you... Read More

Eight Key Steps to Selling Your Business and Cashing In

This year, some 700,000 American businesses will be sold. Most... Read More

Boy oh Boy, The Obstructions and Obstacles

The bad things starts with the letter 'O'?.like Obstacles, Obstruction,... Read More

Top Ten Blunders Business Owners Make

In today's marketplace the words 'job security' have become an... Read More

Marketing Your Small Business - The Top 10 Brilliant Ideas

A Brilliant Marketing Idea... sounds great but what is it?... Read More

Pressure Washing Business and Post Fire Cleanups

Many have not experienced a fire up close. One year... Read More

How to Get Maximum Results With Minimum Effort

Get maximum results with minimum effort. Sounds great doesn't it?... Read More

7 Card Tricks That Improve Your Personal Networking Power

CARD SHARK7 Card Tricks That Improve Your Personal Networking PowerThe... Read More

Blowing Your Own Horn ? A Key Marketing Strategy for Small Business

-- Building Credibility Through Success Stories --Successful solo entrepreneurs spend... Read More

QSR Quick Service - Fast Food Restaurants Labor Situation in United States

One of the major complaints in the QSR Quick Service-Fast... Read More

How Small Business And Nonprofits Can Afford Multimedia For The Web

Multimedia is everywhere on the Internet, whether in the form... Read More

Collection Agency Selection

Frankly, given the legal and regulatory requirements involved in attempting... Read More

Secrets of Cleaning Truck Trailers in Your Fleet from a Veteran Truck Washer

Cleaning the trailers towed by big trucks is not easy,... Read More

Choosing a Truck Wash Location in Nevada, Case Study

There are several well-known truck washes in the Great State... Read More

Franchising 101- What You Absolutely Need to Know

Franchising has made the world look really small. The well... Read More

Truck Detailing Shop Business Case Study

As an entrepreneur you can learn a lot by following... Read More

Small Business Checks ? Money Saving Options

When you go into business for yourself, there are many... Read More

4 Areas Where Your Business is Losing Money

In my 18 years of consulting I have heard it... Read More

Financial Fundamentals - What Every Small Business Owner Should Know!

Business owners rarely go into business to deal with the... Read More