The basic of accounting are of help to anyone who have started this new and very exciting business opportunity. I am also assuming that you are starting a simple, sole proprietorship business where you take more like a hobby than a business but still you need to control it with account to develop it further. Separating your business account from the personal account will make things easier when we come to accounting. It will be better not to take any cash from your business for personal use to give it an opportunity to grow and take care of its issues. When you spend personal cash in the business, count that as growing business and record in business book as business support which is advantageous.
In this case, I would wish you to take accounting as the basics calculation of profit margin and how to grow it or keep it constant. As your business grows bigger, you may need to get a little more complex, but for now, you can keep your books on a simple excel spreadsheet, or one of the many accounting software packages out there.
There are three main group in every business. It also helps you in managing and monitoring the progress of your business. The primary units of record keeping are purchase records,sales records and stock records. The first of these forms is the Balance Sheet. These comprises assets that are in solid form and those in liquid forms, liabilities and full stock of business in net. Asset classification depend on the type of the item and how first it can be moved when it comes to sales. Liabilities are: the bills that you owe, any loans and credit cards for your business. Savings that you have achieved from your business are what we refer as equity. When you add up your assets, the total must equal the total of liabilities + equity.
The total outcome of the business activities that makes up a specified profit margin at a specific time is what we refer as income statement. Income statement is best when prepared in the duration of one month to be convenience with all bill. Cost of production. All related just to the sale of your product or service. Sales – Cost of Goods Sold – Direct Selling Expenses = Gross Profit. Net income equals the gross profit minus all expenses. The third financial form that you should prepare on a regular basis, at least weekly, is a cash flow statement. Accounting and business bookkeeping are very essential because there is no way to run a business unless records are kept to keep the business updated.