One might be resulted in believe that profit is the main objective in a small business but in reality it’s the cash flowing in and out of a small business which will keep the doors open. The concept of profit is relatively narrow and only talks about expenses and income at a certain point in time. Cashflow, however, is more powerful in the sense that it is concerned with the movement of money in and out of a small business. It is concerned with enough time of which the movement of the amount of money takes place. Profits usually do not necessarily coincide making use of their associated income inflows and outflows. The web result is that money receipts often lag cash payments even though profits may be reported, the business enterprise may experience a short-term income shortage. For this reason, it is vital to forecast cash flows and project likely gains. In these terms, it is important to understand how to convert your accrual earnings to your money flow profit. You should be able to maintain enough cash readily available to run the business, however, not so much concerning forfeit possible earnings from additional uses.

Why accounting is needed

Help you to operate better as a business owner

Make timely decisions
Know when to employ a team of employees
Know how to price your products
Discover how to label your expense items
Allows you to determine whether to increase or not
Supports operations projected costs
Stop Fraud and Theft
Control the biggest problem is internal theft
Reconcile your books and stock control of equipment
Raising Capital (assist you to explain financials to stakeholders)
Loans
Investors
What are the Best Practices in Accounting for Small Businesses to handle your common ‘pain points’?
Hire or consult with CPA or accountant
What is the best way and how often to get hold of
What experience are you experiencing in my industry?
Identify what is my break-even point?
Can the accountant measure the overall value of my business
Is it possible to help me grow my business with profit planning techniques
How can you help me to get ready for tax season
What are some special factors for my particular industry?

To succeed, your company should be profitable. All of your business objectives boil down to this one simple fact. But turning a profit is easier said than done. So that you can boost your bottom line, you should know what’s going on financially at all times. You also have to be committed to tracking and comprehending your KPIs.
Do you know the common Profitability Metrics to Track in Business — key performance indicators (KPI)

Whether you choose to hire an expert or do-it-yourself, there are some metrics that you should absolutely need to keep tabs on at all times:

Outstanding Accounts Payable: Outstanding accounts payable (A/P) shows the balance of cash you currently owe to your suppliers.
Average Cash Burn: Average money burn is the rate of which your business’ cash balance is going down on average each month over a specified time period. A negative burn is a wonderful sign because it indicates your business is generating dollars and growing its funds reserves.
Cash Runaway: If your organization is operating baffled, cash runway can help you estimate how many months it is possible to continue before your business exhausts its cash reserves. Similar to your cash burn, a negative runway is a great sign that your business keeps growing its cash reserves.
Gross Margin: Gross margin is really a percentage that demonstrates the total revenue of your business after subtracting the expenses connected with creating and selling your enterprise’ products. It is just a helpful metric to recognize how your revenue comes even close to your costs, allowing you to make changes accordingly.
Customer Acquisition Cost: By focusing on how much you spend on average to get a new customer, you can tell exactly how many customers you need to generate a profit.
Customer Lifetime Value: You must know your LTV so that you could predict your future revenues and estimate the total number of customers you need to grow your profits.
Break-Even Point:How much do I need to generate in revenue for my company to produce a profit?Knowing this number will show you what you should do to turn a income (e.g., acquire more consumers, increase rates, or lower operating expenses).
Net Profit: This can be the single most important number you should know for your business to be a financial success. If you aren’t making a profit, your organization isn’t going to survive for long.
Total revenues comparison with final year/last month. By tracking and comparing your whole revenues over time, you can make sound business choices and set better financial goals.
Average revenue per employee. It is critical to know this number to help you set realistic productivity targets and recognize ways to streamline your business operations.
The following checklist lays out a suggested timeline to deal with the accounting functions which will continue to keep you attuned to the procedures of one’s business and streamline your tax preparation. The accuracy and timeliness of the numbers entered will affect the main element performance indicators that drive company decisions that need to be made, on an everyday, monthly and annual base towards profits.
Daily Accounting Tasks

Review your daily Cashflow position and that means you don’t ‘grow broke’.
Since cash may be the fuel for your business, you won’t ever wish to be running near empty. Start your day by checking how much cash you have on hand.
Weekly Accounting Tasks

2. Record Transactions

Record each transaction (billing buyers, receiving cash from customers, paying vendors, etc.) in the correct account daily or weekly, based on volume. Although recording dealings manually or in Excel bed sheets is acceptable, it is probably simpler to use accounting program like QuickBooks. The huge benefits and control far outweigh the cost.

3. Document and File Receipts

Keep copies of all invoices sent, all money receipts (cash, check and credit card deposits) and all cash payments (cash, check, charge card statements, etc.).

Start a vendors data file, sorted alphabetically, (Sears under “S”, CVS under “C,”and many others.) for easy access. Develop a payroll record sorted by payroll date and a bank statement document sorted by month. deibleader would be to toss all paper receipts into a box and make an effort to decipher them at tax moment, but if you don’t have a small level of transactions, it’s better to have separate files for assorted receipts kept organized as they can be found in. Many accounting software systems let you scan paper receipts and prevent physical files altogether

4. Review Unpaid Bills from Vendors

Every business must have an “unpaid vendors” folder. Keep a record of each of your vendors which includes billing dates, amounts owing and payment deadline. If vendors make discounts available for early payment, you might like to take advantage of that if you have the cash available.

5. Pay Vendors, Sign Checks

Track your accounts payable and have funds earmarked to cover your suppliers on time to avoid any late fees and maintain favorable relationships with them. Should you be able to extend due dates to net 60 or net 90, the better. Whether you make payments on the internet or drop a sign in the mail, keep copies of invoices dispatched and received using accounting computer software.