One might be resulted in believe that profit is the main objective in a small business but in reality it’s the cash flowing in and out of a business which keeps the doors open. The idea of profit is relatively narrow and only talks about expenses and income at a particular point in time. Cashflow, alternatively, is more powerful in the sense that it’s worried about the movement of money in and out of a business. It is concerned with the time of which the movement of the money takes place. Profits usually do not necessarily coincide with their associated cash inflows and outflows. The web result is that funds receipts often lag cash repayments and while profits may be reported, the business may experience a short-term dollars shortage. For this reason, it is essential to forecast cash flows and also project likely profits. In these terms, you should know how to convert your accrual earnings to your money flow profit. You should be able to maintain enough cash readily available to run the business, however, not so much concerning forfeit possible earnings from various other uses.

Why accounting is needed

Help you to operate better as a business owner

Make timely decisions
Know when to employ a team of employees
Know how to price your products
Learn how to label your expense items
Helps you to determine whether to increase or not
Helps with operations projected costs
Stop Fraud and Theft
Control the biggest problem is internal theft
Reconcile your books and inventory control of equipment
Raising Capital (enable you to explain financials to stakeholders)
Loans
Investors
What are the GUIDELINES in Accounting for SMALLER BUSINESSES to handle 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 is my break-even point?
Can the accountant assess the overall value of my business
Is it possible to help me grow my organization with profit planning techniques
How can 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 inescapable fact. But turning a profit is simpler said than done. To be able to boost your bottom line, you should know what’s going on financially all the time. You also need to be committed to tracking and comprehending your KPIs.
Do you know 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 should absolutely need to keep tabs on at all times:

Outstanding Accounts Payable: Remarkable accounts payable (A/P) shows the balance of cash you presently owe to your suppliers.
Average Cash Burn: Average dollars burn is the rate at which your business’ cash balance is going down on average each month over a specified time frame. A negative burn is a wonderful sign because it indicates your business is generating money and growing its money reserves.
Cash Runaway: If your business is operating baffled, cash runway helps 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 a percentage that demonstrates the total revenue of your business after subtracting the costs associated with creating and selling your organization’ products. This is a helpful metric to recognize how your revenue comes even close to your costs, letting you make changes accordingly.
Customer Acquisition Cost: By focusing on how much you spend normally to get a new customer, you can tell how many customers you should generate a profit.
Customer Lifetime Value: You have to know your LTV to help you predict your future revenues and estimate the total number of customers you need to grow your profits.
Break-Even Point:Just how much do I need to generate in sales for my company to generate a profit?Knowing this number will highlight what you need to do to turn a revenue (e.g., acquire more buyers, increase rates, or lower operating expenses).
Net Profit: This can be a single most important number you should know for your business to become a financial success. If you aren’t making a profit, your organization isn’t going to survive for long.
Total revenues comparison with previous year/last month. By tracking and comparing your total revenues over time, you can make sound business selections and set better financial objectives.
Average revenue per employee. It is important to know this number to enable you to set realistic productivity goals and recognize methods to streamline your business operations.
The following checklist lays out a recommended timeline to take care of the accounting functions that will continue to keep you attuned to the operations of your business and streamline your taxes preparation. The precision and timeliness of the amounts entered will affect the main element performance indicators that drive business decisions that need to be made, on an everyday, monthly and annual base 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 won’t ever wish 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 consumers, paying vendors, etc.) in the correct account daily or weekly, based on volume. Although recording transactions manually or in Excel bed sheets is acceptable, it really is probably easier to use accounting software like QuickBooks. The huge benefits and control far outweigh the cost.

3. Document and File Receipts

Keep copies of all invoices sent, all money receipts (cash, check and charge 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,”and many others.) for easy access. Develop Business startup sorted by payroll day and a bank statement document sorted by month. A common habit is to toss all paper receipts into a box and make an effort to decipher them at tax moment, but if you don’t have a small volume of transactions, it’s easier to have separate data for assorted receipts kept arranged as they come in. Many accounting software systems enable you to scan paper receipts and avoid physical files altogether

4. Review Unpaid Bills from Vendors

Every business must have an “unpaid suppliers” folder. Keep an archive of each of one’s vendors that includes billing dates, amounts credited and payment deadline. If vendors offer discounts 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 have funds earmarked to pay your suppliers on time in order to avoid any late fees and keep maintaining favorable relationships with them. Should you be able to extend payment dates to net 60 or net 90, the better. Whether you make payments on the web or drop a check in the mail, keep copies of invoices sent and received using accounting application.