5 Accounting Decisions You Need To Make
Accounting may not be the topic of choice for new or growing businesses. However, good accounting will keep the business going and ready for the future.
With a strong accounting department, a business can survive. Making the right decisions as an owner or manager will help a business succeed. Here are five everyday decisions for growing and new businesses.
Tracking income and expenses
It may seem obvious, but businesses must have a way to track their income and expenses. It's better to avoid manual processes with today's software and adopt accounting software that provides quick, accurate, and accessible data tracking.
Business owners can be confident that their invoices and money are paid on time using software that supports them.
Tracking assets, liabilities, and capital
For a new or growing business, the ability to produce balance sheets and financial reports and have them available is essential. This keeps assets, liabilities, and capital under control. Assets are things that a company owns, such as inventory, cash, and equipment. Liabilities are what the business owes, such as debts or loans.
Cash flow statements for businesses can be easily created using software. The owners will better understand the money spent and how it is received.
Budgeting
Budgeting is an essential part of any business, whether new or established. Budgeting includes establishing plans, identifying growth opportunities, and accelerating the business.
Rolling forecasts are a valuable tool for finance teams throughout the year. Rolling forecasts are a helpful tool for finance teams throughout the year.
When businesses regularly check their budgets throughout the year to compare where they stand and how much budget has been allocated, it makes budgeting easier for the following year. Rolling forecasts are usually extended 6-12 months in the future, allowing businesses to plan and better allocate resources.
Choose between Cash Basis Accounting or Accrual Basis Accounting
Each business must choose a method of accountancy to follow from the beginning. Companies must decide whether to use accrual or cash-basis accounting. Most companies select accrual accounting.
Cash basis accounting differs from accrual accounting primarily in the timing for recognizing expenses and revenues. Cash-based accounting recognizes income and expenses much more quickly than accrual-based accounting. The accrual method is focused more on future expenses and revenues. Cash-based accounting records transactions when cash is exchanged, making it easier to implement.
Hire an internal bookkeeping team or outsource
Accounting is not a profession that every business owner should be. A growing business or start-up will eventually reach the point where bookkeeping needs to be handled by a professional to remain accurate and up to date.
Accounting and bookkeeping are the functions that ensure business owners get the information they require to make sound business decisions. Hiring a bookkeeper to work full-time is an excellent investment for any business, new or old.
You have a few choices when it comes time to hire a bookkeeper. There are three options for hiring a bookkeeper: a full-time employee of the company, an in-person outsourced bookkeeper, and an outsourced, virtual bookkeeper. The benefits of both in-person options are that they are in-person. These options are often more expensive and do not offer the flexibility and scalability of an outsourced virtual service provider.
An outsourced service provider like Basis 365 provides a complete department takeover that handles the business's bookkeeping to ensure efficient and accurate bookkeeping, reporting, and more. There are also infinite options for scaling as a company grows.
