To Get Your Business Basics Right, Learn Accounting
Whether you run a large company with a dedicated team of accountants or have your own small home-based business, you need to know two important things that affect the success of any business viz., Computers and Accounting. Accounting more so, as it enables you to know where your business stands vis-à-vis your competition. To be able to smartly and convincingly talk numbers with your bankers, accountants, shareholders or your employees, you need to learn the craft.
What is accounting?
Accounting is termed as the language of business. Accounting communicates the performance of the business to different stakeholders. It is the recording, sorting and summarizing of data as a result of business transactions.
How to go about learning basic accounting?
Find out about community colleges in your region where you can learn basic accounting and finance. Also, many business training institutions conduct occupational or executive programs or workshops which help you develop your basics and teach you the technicalities of the double entry book-keeping system. These programs also assist you to learn commercial accounting software like QuickBooks or Peachtree.
Objectives of Accounting
Accounting keeps systematic score of transactions, the absence of which can severely impact business. By keeping track of transactions it is possible to avoid the misuse of resources like raw materials, fixed assets and liquidity. Business owners can get the following information from their book of accounts:
- Amount of fund invested
- Business liability – How much business owes
- Business assets – How much others owe to the business
- Assets – What does the business own
Why do I need to know accounting to run my business?
As a business owner you might be interested to know three important bits of information:
- How much cash reserves you have - Many business owners face a situation where their sales figures grow, profits in their accounting books are high but they are running out of cash and are literally bankrupt. Even a successful business can go penniless if the cash is not monitored well. A good understanding of accounting helps you track your cash by doing cash flow projections.
- Taxation - can give you a hard time if you don’t understand accounting well. Often businesses combat with taxmen. To ensure that you do everything in compliance with the tax policies from the accounting perspective, knowledge of accounting is a must.
- Getting Bank Loans – Banks are very particular about meticulous and orderly financial statements when providing loans. If your accounting statements are as per their guidelines, only then the bank will trust you to loan the money.
Today there are numerous financial and accounting tools available which help you take your business to the next level. You can learn these and easily transform the face of your business.
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