Cash Flow And Accounting For Entrepreneurs
DO’S
1. Learn basic accounting before you go into business. Go to school if necessary.
2. Consult and retain an accountant familiar with your industry before you start.
3. Determine what accounting software program works best for your business.
4. In the beginning, do your own bookkeeping to gain knowledge of your accounting.
5. Set up inventory policy and internal controls including safeguards against dishonesty.
6. Reconcile your bank account at least once a month when your bank statement is received.
7. Maintain and update your cash flow control spreadsheet monthly.
8. Plan to outsource your payroll and payroll reporting to a payroll service provider.
9. Prepare financial statements at least monthly, keeping your business records separate from your personal records.
10. Regardless of the type of biz you have, you need to accept credit cards to stay competitive in your industry. And for that, you need a merchant credit card processing service that understands your business. A merchant account is a type of bank account that allows your business to process debit and credit cards payments for orders made through the internet and/or a physical location. It is essential that you research various credit card processing services according to the specific needs of your business.
DON’TS
1. Delegate the authority to sign checks to anyone.
2. Use money withheld for payroll taxes or sales taxes for other purposes.
3. Commingle personal assets with your business assets.
4. Delegate cash flow projections–your lifeline to liquidity.
5. Be optimistic in sales projections or conservative in expense projections.
6. Rely on verbal agreements on any important matter including purchases.
7. Pay an invoice without matching it to your purchase order.
8. Delegate your relationship with your lending sources.
9. Wait to establish credit sources until you have a need for financing.
10. Overlook seeking advice from your accountant and lawyer on important financial matters.
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Great post, great advice. Once you have outgrown doing the books yourself (hopefully with good accounting counsel from the beginning), perhaps outsourcing is a good option. Let’s face it, once your business is big enough to put lots of time demands on you, is your time better spent on marketing or production, or doing the books?
I would add to don’t #4, do it yourself in the beginning, but seek outside professional counsel. Without a solid understanding of all financial statements many times cash flow needs can be missed on projecitons. Good luck!
Thanks for your article.I’m planning to learn many methods to make money with supporting outsourcing services. Outsourcing Services, such as IT Outsourcing,Web Development Outsourcing Services. I got some information about the Outsourcing from this article and is useful to me.Tks again.
Good tips. Maintaining and updating your cash flow monthly is extremely important, especially since it is a new business, and you have yet to figure out a normal spending habit, it’ll help keep you in check with what you have to spend, and with what you need to hold onto.