Setting Up an Accounting System
Now that you have legally formed your business and have a bank account in place, you'll want to decide upon on Accounting system for your business. This simply means deciding the ways and means by which your business will track revenue, expenses, assets, financial obligations (debts), and so on. While you may be tempted to bypass this step for a later stage, it's important to choose a system now so that you can properly track the fiscal health of your business from the start.
For most small businesses, the best choice for your accounting needs will be an Accounting software package. These packages will give you the tools you need in order to monitor your transactions and fiscal health. Basic features include the following:
- A General Ledger system for posting debits and credits from your bank account.
- An Income Statement feature which will allow you to see whether or not your business is profitable at any given point in time.
- A Balance Sheet feature which will show your business's assets, debt obligations, and net worth at any point in time.
- A Cash Flow Statement feature which will allow you to see how much cash is flowing in and out of your business, helping you to guage how much cash you will need at any given point to meet upcoming expenses, obligations, and opportunities.
The above are the essential features that make selecting an Accounting software package a good choice. Below are some popular options for Small Business accounting:
- Quickbooks by Intuit, Inc.
- Simply Accounting by Sage Accounting Software
- Peachtree by Sage Accounting Sofware
- Business Essentials by MYOB US, Inc.
Be sure to research multiple packages and compare their offerings to your needs before deciding upon a particular product. In addition, software is only valuable when used, so be sure to learn the various features that your chosen software provides, utilize them, and most importantly, actually update your general ledger on a consistent basis.