Accounting 101 or basic accounting deals with the basic concept of accounting and recording transactions that occur on a daily basis. This means all monetary transactions, such as money coming in and going out, money paid to us and the money paid by us. It also allows you to manage and analyze income and expenses and the total cash flow a business is the production of the final statements the income statement, balance sheet and cash flow statement.

Debits and Credits

method of double entry accounting requires a debit and a credit for each transaction. Each transaction affects two accounts – one must be charged, and must be credited. The general rule of thumb is that debits increasing assets, expenses, dividends and losses and reduce debt and equity, while loans to do the opposite: they reduce assets and increasing liabilities, revenues, earnings and equity. To debit an account, record the amount on the left side of the account; to credit the account, enter the amount right. The abbreviation “DR" represents debit transactions and “CR" represents credit.

Resources and Debts

Assets represent what the company owns; they add economic value to the company. Liabilities are what the company owes and reduce the economic value of the business. Registers balance sheet assets and liabilities of the business. They are often categorized as short-term and long-term assets and / or liabilities. Current assets, also known as current assets, represents the liquidity position of the business and include things like bank accounts, accounts receivable and inventory. Fixed or non-current assets include items such as property and machinery. Short-term or short-term liabilities of operations include items such as creditors and accrued charges, while long-term liabilities include loans and mortgages.

Financial Statement

In the end the year, each company is preparing a set of year-end statements. These statements record, manage and analyze all the financial data and activities throughout the year. The income statement is one of these final statements. It describes the revenue and expenditure of the company and the total profit or loss for a given financial period. Even if they are used at various intervals throughout the year, the balance sheet is also a year-end report, and as such, summarizes the assets and liabilities of the business and demonstrate the net worth at the end of the financial year. The cash flow statement is the third balance sheet that is used for reporting financial data and records cash coming in and going out of business.

Count on the liquidity of an extra time

In the beginning when starting your own business, it is often associated with a lot of expenses. It can range from the deposit to the landlord where it will have its offices to the building of the website or purchasing the first large order. Not to underestimate these costs is everything to be able to hold out financially until the money starts to pour in. Just the gap between that which entrepreneurs often forced to take cost before you get revenues often causes concern. For example. perhaps the new company a large order from a buyer, but they are forced to actually take the cost of this order before they get paid. And it can sometimes take quite a while before you get paid. In between, it is important to have counted both one and two times the cash flows look like. Another example is that in theory can grow very strongly, without self-employed can take out a salary. An example of this is that you invest the entire profit in a new layer. For should you grow as a company, you can not take out the entire profit, but often need to reinvest it in even more products that can be sold. And often continues this process of organic growth for quite some time. During this time, it is important to have calculated how we as individuals can manage, even if everything on paper looks good.

Test on a small scale

Often we see companies from the start build the entire solution. It can range from web who want to have your own video player instead of using an existing solution that has been significantly cheaper, or service provider who wants to have its own CRM system rather than using an existing (though it lacks that little feature that course had made it even easier). The point is that these functions can usually added gradually, and that the most important thing in a starting stage is to test if the business model is. Make it there are no barriers to create a perfect universe as profitability keeps it, but adding the mass of unnecessary time and take lots of unnecessary costs in the initial phase fills rarely function. So focus on testing the core of the business model as simple as possible!

Think through all the bottlenecks

When you start a business thinking hopefully through all the hazards that may exist. Is the programming that will be difficult? Or is it to find that the supplier in China? Or is it the threat of the competitor makes a similar thing may cause troubles in the future? Often usually already in the business plan writing down these threats and challenges, and the solutions they have against these potential problems. We want to raise a warning finger to the list of problems usually done shortly. What you think is the challenge may actually prove to go just fine, but instead it"s that simple thing, which of course would be resolved just like that which proves to be a real problem. For example. finding the perfect venue in the city"s main street where the were so many vacant spaces. Or find your employees as of course would just take care of that simple thing after all, anyone should be able to fix. To actually see not only the likely problems, but to see all the potential problems (well, as many as you can think of in each case) that can occur is a good way to avoid future problems, then you will be very much better prepared.

Take in capital

We have seen countless examples of cases where owners want to retain 100%, and instead choose to grow slowly when capital hinder faster growth. Instead, you end up in a position where you can not hire the seller which would accelerate growth significantly, or buy into a twice as large warehouse that would allow a higher margin on each product sold due to lower purchase price. One way to make an investment, if you for example sell 10% of your company to raise capital, so actually need the company"s value only increased by a bit more than 10% for it to be the right decision. So, do not sit and “stingy" with the shares of a hefty capital injection could make a difference, and see not venture as something evil. You will in addition to the capital probably also access to a large network and experienced businessmen and women can come with super tip to your company.

Keep track of Accounts

Finally, we as the accounting firm of course also strike a blow for the importance of beginning to have a solution on how accounts should be managed. Although all companies from the beginning is small, so it will quickly deadlines as example VAT declarations to be submitted to the Tax Agency. We can not emphasize enough how important this is, and how stressful the situation is for business owners who realize that “VAT is supposed to be declared on Monday!". Most often this had been avoided by either yourself acquainted with the books and manage it as long as it is manageable, or by starting a dialogue with a bookkeeper. At this post is attributed to the time of year when all the annual reports to be produced at accounting firms, and very many therefore busy. The daily gain a range of calls from stressed entrepreneur who now realize that the Tax deadlines creeping closer, and inform them that unfortunately we will not have time to help because time is so short is not fun. But it provides an important lesson; whether you want to do bookkeeping yourself or take help from an accountant, you should not wait too long. For the same time you will need to help with your accounting will probably very many others also have it.

Finally, we say as usual; do not hesitate to contact us if you have any questions or concerns when to start their own businesses or questions regarding your account!

Sticky

As an entrepreneur, you want to minimize your costs and maximize your revenue. Accounting is often seen as a boring task for many business owners, yet many who choose to take care of the bookkeeping yourself – usually in order to save money. After all there are a plethora of accounting software that makes things easier. Others choose an hire an accounting firm to take care of the accounts and thus have more time to work on revenue-generating activities – the company was founded. There are advantages and disadvantages to both options.

Despite laws and regulations on accounting obligation, even the entrepreneur great benefit to, the records, to oversee operations and direct it towards the goals set. The catering company"s current accounts typically have full control and transparency in the economic situation. If you do it yourself and you have a very good handle on things. As an entrepreneur, however, it may be hard to keep up to date on all the applicable rules and changes in tax and other legislation applicable to accounting, tax, taxes, salaries etc. It is easier and more motivating to keep versed in regulations affecting the company"s core business.

Benefits of Bookkeeping by Yourself

  • Good control and visibility into the company"s financial position.
  • It may feel fun and useful to yourself to take care of the matter .
  • You experience it as it does not cost anything – it costs your time and often anxiety when complex issues arise.

Disadvantages of Bookkeeping by Yourself

  • Accounting takes a lot of time, which results in you getting less time for other things.
  • Without any knowledge of the area, there is a higher risk of making mistakes.
  • It might get boring to see records in a long turn.

Advantages of Hiring an Accounting Firm

  • Everything should be done right and done on time.
  • You save time and can focus on what you other important things that you need to do.
  • You do not have to keep track of a lot of records.

Drawbacks of Hiring an Accounting Firm

  • It might be an added expense that you need to cover on monthly basis.
  • You get less control over the operations.

An entrepreneur can put a price on their own or an employee"s time and compare it with what he would need to pay for in hiring an accounting firm. In many cases, most would come to the conclusion it"s more advantageous to hire an accounting firm. In particular, if you choose an agency that offers a good solution for the company, maintain a good control and get visibility into the company"s financial position through regular and transparent reporting, you would be sure that have spent your money wisely.

Overall, it still depends on your personal preference if you want to handle things on your own or prefer the aid of professionals who would give you a peace of mind.