How important is a knowledge of accounting in running a small business?Thu Feb 25 2021. 3 min read
Do you own your own business? If you do, how do you handle the accounting? Is it something you outsource? Something you would rather not think about? How important is the accounting for your business?
Here’s some advice from PDR CPAs and Associates: “Accounting plays a vital role in running a business because it helps you track income and expenditures, ensure statutory compliance, and provide investors, management, and government with quantitative financial information which can be used in making business decisions.
There are three key financial statements generated by your records.
- The income statement provides you with information about the profit and loss
- The balance sheet gives you a clear picture on the financial position of your business on a particular date.
- The cash flow statement is a bridge between the income statement and balance sheet and reports the cash generated and spent during a specific period of time.
It is critical you keep your financial records clean and up to date if you want to keep your business afloat.”
So, even if the accounting is something you’d rather not deal with, keeping your books current – and accurate – is hugely important to your business’s success.
On the plus side, accounting can be outsourced to an outside CPA firm. Not every challenging task that’s part of your business can be, but hiring an outside person to handle your accounting can be one of the best investments you can make in your business.