One might be resulted in believe that profit is the main objective in a business but in reality it is the cash flowing in and out of a small 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, however, is more dynamic in the sense that it is concerned with 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 do not necessarily coincide making use of their associated cash inflows and outflows. The net result is that money receipts often lag cash repayments even though profits may be reported, the business enterprise may experience a short-term income shortage. For this reason, it is vital to forecast cash flows along with project likely earnings. In these terms, you should understand how to convert your accrual income to your cash flow profit. You have to be in a position to maintain enough cash readily available to run the business, but not so much as to forfeit possible earnings from different uses.

Why accounting is needed

Help you to operate better as a business owner

Make timely decisions
Know when to hire a team of employees
Know how to price your products
Understand how to label your expense items
Allows 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 Best Practices in Accounting for Small Businesses to handle your common ‘pain points’?
Hire or check with CPA or accountant
What is the simplest way and how often to contact
What experience do you have in my industry?
Identify what’s my break-even point?
Can the accountant assess the overall value of my business
Is it possible to help me grow my enterprise with profit planning techniques
How will you help me to prepare for tax season
What are some special factors for my particular industry?

To succeed, your company must be profitable. All your business objectives boil right down to this one inescapable fact. But turning a profit is simpler said than done. In order to boost your bottom line, you need to know what’s going on financially constantly. You also need 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 ought to absolutely need to keep tabs on at all times:

Outstanding Accounts Payable: Spectacular accounts payable (A/P) shows the total amount of cash you right now owe to your suppliers.
Average Cash Burn: Average dollars burn is the rate at which your business’ cash balance is certainly going down on average each month over a specified time period. A negative burn is a good sign because it indicates your organization is generating cash and growing its income reserves.
Cash Runaway: If your business is operating at a loss, cash runway helps you estimate how many months you can continue before your business exhausts its cash reserves. Similar to your cash burn, a poor runway is a great 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. It is just a helpful metric to identify how your revenue comes even close to your costs, enabling you to 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 have to generate a profit.
Customer Lifetime Value: You have to know your LTV so as to predict your future revenues and estimate the total number of customers you have to grow your profits.
Break-Even Point:How much do I need to generate in revenue for my company to generate a profit?Knowing this number will show you what you need to do to turn a earnings (e.g., acquire more clients, increase costs, 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. If you aren’t making a profit, your company isn’t going to survive for long.
Total revenues comparison with previous year/last month. By monitoring and comparing your entire revenues over time, you’ll be able to make sound business selections and set better financial ambitions.
Average revenue per employee. It is critical to know this number so that you can set realistic productivity ambitions and recognize ways to streamline your business operations.
The next checklist lays out a recommended timeline to take care of the accounting functions that will hold you attuned to the functions of one’s business and streamline your tax preparation. Business ideas and timeliness of the figures entered will affect the key performance indicators that drive company decisions that require to be made, on a daily, monthly and annual base towards profits.
Daily Accounting Tasks

Review your daily Cashflow position so 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 buyers, 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 is probably easier to use accounting application like QuickBooks. The benefits and control far outweigh the price.

3. Document and File Receipts

Keep copies of all invoices sent, all income receipts (cash, check and charge card deposits) and all cash payments (cash, check, charge card statements, etc.).

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

4. Review Unpaid Bills from Vendors

Every business must have an “unpaid vendors” folder. Keep an archive of each of your vendors that includes billing dates, amounts due and payment due date. 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 also have funds earmarked to cover your suppliers on time to avoid any late fees and maintain favorable relationships with them. Should you be able to extend payment dates to net 60 or net 90, the higher. Whether you make payments on the net or drop a sign in the mail, keep copies of invoices delivered and received using accounting software.