A small business will generally mean an organization that is managed by a few people with a small number of employees. The number of employees is usually under hundred. Small businesses are very beneficial in nature because they run on lower costs and are easy to maintain. They are also relatively easy to maintain and can adapt to the changes occurring in the market faster. Therefore, the element of risk is relatively lower. Moreover, over the years, small business ventures have earned a lot of credibility for themselves and now are seen as the answer to many complexities of big bulky businesses.

Accounting is one of the most major processes in any business. It is the act of recording, verifying and reporting all the assets and liabilities of a company. It is of great use to decision-makers because it helps them take steps in order to reduce their costs and increase profit. Accounting is also a proof of a company’s goodwill and is referred to by auditors monitoring the financial dealings of a company. Small business accounting can be maintained and regulated in varied ways. If there is the need to divert all intellectual resources to other processes, then the business of accounting can be outsourced to companies that specifically deal with it. Again, accountants can be hired to look after the department of accounting. Accounting software makers like Quick Books and Famous Software also offer small business accounting software, which effectively reduces the cost of maintaining an accountant in the company.

Many are of the opinion that it can be handled within the company itself and there is no need to outsource it. For this purpose, the market offers books like Streetwise Small Business Start-Up, which is primarily a book of guidelines on how to manage the accounts of a small business. Also many business specific websites are on offer on the Internet, which provide essential tools for successfully running a particular venture.

When going about the business of small business accounting, it should be kept in mind that things like the method of accounting (cash flow or accrual), business records, issues of tax, internal control, employee benefit policy and financial assistance should be kept on the mind. Moreover, because it can be handled with the organisation itself, it is important to know the basics of things like the balance sheet, the income statement, cash flow control and accounting software.

Small business accounting might require less effort than the mammoth task of managing the accounts of a big company, but it is in no way less important and it should not be dealt with a callous attitude. If there any problem with the accounts of a company, then it will invariably run into trouble. Because any business runs on capital and if that is fudged then it cannot work smoothly. This is true especially for small businesses because financial credibility is of importance to them. A transparent and cohesive system of accounting will earn them respect.

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Small Business Record-keeping involves maintaining accurate accounts and evidence of all of your business’ transactions. You should always keep records in your business because it allows you to have a general idea of how your business is doing. For example, you might determine what products are being sold the most, which ones are not selling well, and how much profit you are making per sale. In addition, records will provide you with the data needed to prepare financial statements and tax returns for your business.

Always try to keep records of the following items:

Expenses: You must always keep a record of all the expenses your business incurs. Opening a business checking account is a great way to keep track of expenses. A checking account will give you the exact date, quantity, and expenses incurred by your business throughout the month. Income: At a minimum you should record the type of payments received, dates received, and the source of payments. Remember that your business might earn revenue from different sources. For example, you might receive income from selling goods and services, selling an asset (i.e. a car) to finance your business, or from dividends received from investments.Inventory: Always keep an accurate record of your inventory at hand. Update inventory records frequently; as soon as an item is sold, remove it from your inventory account.Payroll: Regardless of the number of employees your business has, always keep adequate payroll records. As an employer, you are expected to keep records of each employee, listing their personal information as well as the hours worked and the wages earned. Every quarter prepare Form 941 (the Employees’ Quarterly Federal Tax Return), which totals each employee’s withholding for federal taxes and Social Security. You also have to prepare the W-2 form every year for each employee. The form summarizes each employee’s total earnings and withholdings for the year and has to be sent to the employee and to the IRS. A Sample Record:

In order to keep small business records of all the transactions in your business, you may use the single entry bookkeeping method, which is simple and efficient, as shown below:

Date | Description | Revenue | Expenses

4-Jan | Paid | phone bill | $250.00
4-Jan | Performed | repair service | $700.00

5-Jan | Paid | rent | $500.00

5-Jan | Performed | repair service | $1150.00

7-Jan |Paid | all employees $800.00

8-Jan Paid | Electricity bill $150.00

January totals $1,850.00 $1,700.00

Tip: Always keep your personal financial records separate from your small business records, this will allow you to keep track of all your business expenses more easily. It is also very important that you keep your business records for at least three years, as the IRS has the right to audit any transaction that occurred during the last three years in most states.

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It is important for businessmen to discern the status of their business at any point of the time. They should be aware of how much profit their present business strategy is reaping and what all losses are incurring upon the company. This will ensure the success of business or longer time. Whether a business is at large scale or at small, in both the cases accounting plays a crucial role in calculating the total profit and loss of the company every business year. Small business accounting is one of the easiest ways of availing cheap and reliable accounting services.

Financial processes of small business firms are as important as that of large one. Small businesses too have to undergo the tedious and cumbersome task of accounting on the day to day basis. They can settle the accounting task with ease by hiring professional assistance from small business accounting firms.

Small business accounting involves three prominent steps to strengthen financial front

1. Profit & Loss Statement
2. Balance Sheet
3. Cash Flow Statement

First step, profit and loss statement ensures the accessibility of the previous records. It also helps in knowing how much business is done in the specified duration. This step will ensure the scale of business progress i.e. business is running successfully or not.

Second step, Balance sheet maintenance is one of the most crucial part of the record maintenance. It illustrates how much business has earned and what all assets have been acquired during a specific interval of time. This statement is the testimony of the liabilities over the business too so it is essential to keep daily record of balance sheet. It should be updated on the daily basis without any error.

The third most important requirement of small business accounting is the cash flow statement. This statement depicts the status of future cash balance that will be retained after completing all the payments and liabilities. This is required for the assessment of the capital investment in future. It is made keeping in view the upcoming capital investment and business expenditures.

Two main methods re employed in working out of the small business accounting process:

1. Cash Basis Method
2. Accrual Method

Cash basis method is too easy to comprehend and implement so most of the firms running small businesses employ this method. In this method payments made are referred to as expenses and cash receipts are considered as the income gained. In cash basis procedure daily transactions are recorded in the accounts book. Even if cash paid is yet not cleared then too it is added in the records and when cleared received is added to it.

In Accrual method, the procedure is little complicated as it involves key facets of the small business accounting including pay roll taxation, tax liabilities, income tax, quarterly returns, internal financial flow, individual business transactions, and maintaining daily records.

You can easily get access to outsourcing firms that deals in the services of accounting, small business accounting, SEO, SEO NYC, bookkeeping, and search engine marketing in New York City via Internet directories.

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It is not about the size of your business; no matter what the size is, accounting is one business process that one needs to undertake. Setting up any business and running it successfully is not an easy task and the task becomes all the more difficult if you are not good at dealing with numbers. Managing numbers is tricky and if you are someone who is not very comfortable with that, then the task becomes all the more difficult. However, as a business owner you also know that properly handling all the numbers of rather the accounting work for your firm needs to be handled efficiently. Small business accounting can turn out to be very difficult for you if you do not have the proper resources in place to do the work for you. You can either hire an accountant in-house or outsource the accounting work of your small business to a third party to get the work done efficiently.

Small business accounting can be handled efficiently if you as the owner make sure that every aspect of your business dealings are properly accounted for. For example, you can make sure that you keep the invoice of any financial transaction that is made in the name of your business. Whatever things are purchased, no matter how small or big it is should be properly accounted for.

It is very important that all these things are done correctly if you want to ensure that you take your businesses to the highest levels of success. You always start with a small business and mange it well to gradually earn huge amount of success. To run a business successfully you need to put in lots of effort, so with all the resources available at your disposal you must make sure that this is done efficiently.

Small business accounting must be handled properly and if this is not done it can cause the owner lots of difficulties during the tax paying season. Paying taxes to the government is mandatory and you can do this without delay only if your have the small business accounting of your firm in place. An accountant is a professionally qualified to handle and deal with everything that needs to be taken care of for calculating the taxes. Only a professional will know what things need to be taken care of for calculating the taxes, so it will be better if you let him handle this for you.

There is also certain software available in the market to help in taking care of small business accounting. The accountants can use the software to ease the work that they are doing, they just need to know how to use the software efficiently to manage all the accounts of the business. If the accounts are managed properly one can easily find out if their business is running successfully or is it incurring any loses. Once you have with you a record of all the income and expense incurred for your business, you can decide whether you want to adopt some new strategies for your business or not.

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