A small business will generally mean an organization that is managed by a few people with a small number of employees. The number of employees is usually under hundred. Small businesses are very beneficial in nature because they run on lower costs and are easy to maintain. They are also relatively easy to maintain and can adapt to the changes occurring in the market faster. Therefore, the element of risk is relatively lower. Moreover, over the years, small business ventures have earned a lot of credibility for themselves and now are seen as the answer to many complexities of big bulky businesses.
Accounting is one of the most major processes in any business. It is the act of recording, verifying and reporting all the assets and liabilities of a company. It is of great use to decision-makers because it helps them take steps in order to reduce their costs and increase profit. Accounting is also a proof of a company’s goodwill and is referred to by auditors monitoring the financial dealings of a company. Small business accounting can be maintained and regulated in varied ways. If there is the need to divert all intellectual resources to other processes, then the business of accounting can be outsourced to companies that specifically deal with it. Again, accountants can be hired to look after the department of accounting. Accounting software makers like Quick Books and Famous Software also offer small business accounting software, which effectively reduces the cost of maintaining an accountant in the company.
Many are of the opinion that it can be handled within the company itself and there is no need to outsource it. For this purpose, the market offers books like Streetwise Small Business Start-Up, which is primarily a book of guidelines on how to manage the accounts of a small business. Also many business specific websites are on offer on the Internet, which provide essential tools for successfully running a particular venture.
When going about the business of small business accounting, it should be kept in mind that things like the method of accounting (cash flow or accrual), business records, issues of tax, internal control, employee benefit policy and financial assistance should be kept on the mind. Moreover, because it can be handled with the organisation itself, it is important to know the basics of things like the balance sheet, the income statement, cash flow control and accounting software.
Small business accounting might require less effort than the mammoth task of managing the accounts of a big company, but it is in no way less important and it should not be dealt with a callous attitude. If there any problem with the accounts of a company, then it will invariably run into trouble. Because any business runs on capital and if that is fudged then it cannot work smoothly. This is true especially for small businesses because financial credibility is of importance to them. A transparent and cohesive system of accounting will earn them respect.