One might be resulted in believe that profit is the main objective in a business but in reality it’s the income flowing in and out of a business which keeps the doors open. The idea of profit is fairly narrow and only talks about expenses and income at a particular point in time. Cashflow, alternatively, is more dynamic in the sense that it’s worried about the movement of profit and out of a small business. It is concerned with the time at which the movement of the amount of money takes place. Profits usually do not necessarily coincide making use of their associated money inflows and outflows. The web result is that money receipts often lag cash obligations and while profits may be reported, the business enterprise may experience a short-term dollars shortage. For this reason, it is vital to forecast cash flows as well as project likely revenue. In these terms, it is very important know how to convert your accrual income to your money flow profit. You should be in a position to maintain enough cash on hand to run the business, but not so much as to forfeit possible earnings from other uses.

Why accounting is needed

Help you to function better as a business owner

Make timely decisions
Know when to employ a team of employees
Discover how to price your products
Discover how to label your expense items
Helps you to determine whether to expand or not
Supports operations projected costs
Stop Fraud and Theft
Control the largest problem is internal theft
Reconcile your books and stock control of equipment
Raising Capital (help you to explain financials to stakeholders)
Loans
Investors
What are the GUIDELINES in Accounting for Small Businesses to address your common ‘pain points’?
Hire or consult with CPA or accountant
What is the best way and how often to contact
What experience are you experiencing in my industry?
Identify what’s my break-even point?
Can the accountant assess the overall value of my business
Can you help me grow my business with profit planning techniques
How will you help me to get ready for tax season
What are some special considerations for my particular industry?

To succeed, your company should be profitable. All your business objectives boil down to this one simple fact. But turning a profit is simpler said than done. So that you can boost your bottom line, you should know what’s going on financially constantly. You also have to be committed to tracking and comprehending your KPIs.
What are the common Profitability Metrics to Monitor in Business — key performance indicators (KPI)

Whether you decide to hire an expert or do-it-yourself, there are some metrics that you need to absolutely need to keep track of at all times:

Outstanding Accounts Payable: Outstanding accounts payable (A/P) shows the balance of cash you currently owe to your suppliers.
Average Cash Burn: Average income burn is the rate at which your business’ cash balance is certainly going down on average every month over a specified time frame. A negative burn is a good sign because it indicates your business is generating cash and growing its income reserves.
Cash Runaway: If your business is operating baffled, cash runway can help you estimate how many months you can continue before your business exhausts its cash reserves. Much like your cash burn, a poor runway is a good sign that your business is growing its cash reserves.
Gross Margin: Gross margin is really a percentage that demonstrates the full total revenue of your business after subtracting the costs connected with creating and selling your enterprise’ products. It is just a helpful metric to identify how your revenue comes even close to your costs, letting you make changes accordingly.
Customer Acquisition Cost: By focusing on how much you spend on average to acquire a new customer, it is possible to tell how many customers it is advisable to generate a profit.
Customer Lifetime Value: You need to know your LTV so as to predict your own future revenues and estimate the total number of customers you need to grow your profits.
Break-Even Point:How much do I need to generate in sales for my company to produce a profit?Knowing this number will highlight what you must do to turn a income (e.g., acquire more clients, increase prices, or lower operating expenses).
Net Profit: It is the single most important number you need to know for your business to become a financial success. In the event that you aren’t making a profit, your organization isn’t going to survive for long.
Total revenues comparison with final year/last month. By tracking and comparing your whole revenues over time, you can make sound business selections and set better financial objectives.
Average revenue per employee. It’s important to know this number so that you could set realistic productivity targets and recognize methods to streamline your business operations.
The next checklist lays out a recommended timeline to take care of the accounting functions that may maintain you attuned to the operations of one’s business and streamline your taxes preparation. The accuracy and timeliness of the numbers entered will affect the key performance indicators that drive company decisions that require to be made, on an everyday, monthly and annual basis towards profits.
Daily Accounting Tasks

Review your daily Cashflow position which means you don’t ‘grow broke’.
Since cash may be the fuel for your business, you never desire to be running near empty. Start your day by checking how much cash you have on hand.
Weekly Accounting Tasks

2. Record Transactions

Record each transaction (billing clients, receiving cash from buyers, paying vendors, etc.) in the proper account daily or weekly, based on volume. Although recording transactions manually or in Excel bed sheets is acceptable, it really is probably simpler to use accounting application like QuickBooks. The benefits and control far outweigh the cost.

3. Document and File Receipts

Keep copies of all invoices sent, all money receipts (cash, check and credit card deposits) and all cash obligations (cash, check, charge card statements, etc.).

Start a vendors data file, sorted alphabetically, (Sears under “S”, CVS under “C,”etc.) for easy access. Develop a payroll file sorted by payroll time and a bank statement data file sorted by month. A standard habit would be to toss all paper receipts right into a box and make an effort to decipher them at tax period, but if you don’t have a small volume of transactions, it’s better to have separate documents for assorted receipts kept arranged as they can be found in. . Many accounting software systems let you scan paper receipts and prevent physical files altogether

4. Review Unpaid Expenses from Vendors

Every business should have an “unpaid vendors” folder. Keep an archive of each of one’s vendors which includes billing dates, amounts credited and payment due date. If vendors make discounts available for early payment, you might like to take advantage of that if you have the cash available.

5. Pay Vendors, Sign Checks

Track your accounts payable and also have funds earmarked to cover your suppliers on time in order to avoid any late fees and maintain favorable relationships with them. For anyone who is able to extend payment dates to net 60 or net 90, the better. Whether you make payments on-line or drop a sign in the mail, keep copies of invoices directed and received using accounting program.