As a small business owner, you may have to carry out everything from scratch such as follow-ups from your prospective client to meeting them. Since there are many practicing professionals in India, you may be tempted to outsource the accounting of your company to them. On the contrary, as a business owner, you should have a sound knowledge of accounting to cross-verify the reports. Here is the list of five things you must know to lead your small business:
Often when accounting and bookkeeping are under your control or supervision, you may put them at the lowest priority on your to-do list. But if you are outsourcing it to a professional, it is necessary that you keep a watch that your books of accounts are maintained on a daily/weekly basis. This will ensure that there is relatively less work at the time of filing a return and important data is not forgotten or missed.
You as the business owner come to trust that individual who handles your accounts unquestioningly. But this does not imply that you stop looking after the books of accounts. It is important to review your books regularly to prevent your business from any kind of manipulation if any. In addition to this reviewing, your accounts will provide you with a clearer picture of how your business works, in which area there is a need for improvement and where resources need to be allocated. However, it is a good practice to review accounts at fixed intervals but you should also review your accounts at unscheduled times to ensure proper maintenance of your books of accounts.
In today’s business environment, as a business owner, you should know about your cash flow both monthly and annually. Sound knowledge of your cash flow cycle will help you to take a decision such as expansion and consolidation of business. Your monthly cash flow will help you to plan your business day to day activities such as when you need to promote your product and services and when to develop new features or value-added services.
The first and foremost step to become comfortable with your business accounts is to understand the basics about it. A good way to do this is to sit and understand the bare bones of accounting by any professional who has sound knowledge of accounts. With their assistance, furnish a checklist of the essentials of accounts you should be familiar with. You can expand your scope of the accounting structures understanding of your business, once you master your furnished checklist.
Every small business owner should be aware of the amount of tax that they are paying irrespective of its type. Generally, your business taxes will also be your personal taxes if you are a sole proprietor, so it is important that you get the picture relating to the expenses that can be deducted, the types of taxes payable and their tax rate. After you have mastered this you will have a better understanding regarding when and how to file your advance taxes and how much resources shall be kept aside to cover these government taxes.
As an owner of a business, you should be a jack of all trades, in simple words you should have a basic knowledge of accounting and finances to utilize the available resources in the best possible manner. And to begin with this you can follow above-mentioned five facets that will help you in strategizing your business growth in a more comprehensive and planned manner.