Accounting is an important necessity if you want to start a business. In general terms, you cannot consider your business without Accounting. You should know that accounting is the language of business. And you must know the basics of this language.
So consider first:
What Is Accounting?
In general terms accounting is a documentation of financial transactions and this activity of financial transaction has three major terms.
Bookkeeping is an important aspect of accounting this is a management of financial transactions according to activities.
- Management Accounting
Management accounting is analysis of recorded data to take decision and future management regarding the business growth and development.
- Tax Records
Now the steps to how the accounting uses to create a simple small business:
Open a Bank Account
After successful registering in business you`ll need somewhere to keep your business income. Having a separate business bank account makes you simple to keep track of your financial transactions regarding your business. This will help you pay the tax. And every partnership and cooperation legally need a separate account for business hence its must recommend. And a separate bank account is one of your business assets.
Before you talk to bank about opening a bank account you must have to consider business account and compare fee structure and if you want to open a business account, you must have business name registered with your state. And check a document required to open a business account with a individual bank.
Choose Small Business Accounting Software
Every small business accounting starts with a single sheet of paper. But This type of record will become more complicated with the time and there are more problems arises when you track the accounting data hence the thing that every small business owner has such a business process that represents the accounting data with a particular manner and some set of rules. For this, the accounting software is the best choice for the small business owner to make the track of their business expenses and income. This can provide the means to consider the business progress.
Develop a Bookkeeping System
Accounting is high level process to keep track the financial transaction of business. Bookkeeping is one of the areas of accounting which builds the financial statements regularly for your business. How it is differ from accounting is it is day to day process to keep track of your business transactions, categorized the transactions and reconcile the bank statements.
When your business is big enough they can hire a good and professional bookkeeper who helps you to manage your bookkeeping account.
Choose the Method of Accounting
Many business owners can use the different types for accounting there are two main and popular methods of accounting:
- Cash Method: In this method the revenue and expenses are recognized at the time they are actually received or paid it is the best and simplest method of starting a small business.
- Accrual Method: in this method the revenue and expenses are considered when transaction occurs even if the cash isn’t received or paid to someone This method is most used by the publicly held corporations.
Determine How You Accept the Payments
When your product is actually starts selling you’ll Need the different ways to accept the payment If you accepts the different ways of payments then it must increase selling strategy of your product. Acceptance of credit cards and debit cards is one of the safe way to accept the payment this can reduce the hassle of accepting the payment.
You can also use the merchant method of accepting the payment for your business For this you’ll need the merchant account. A merchant Account is type of bank account which allows you to accept the payment payments from customers There Are Different payments merchants like paytm, phone pay, bharat pay which provides the merchant accounts to accept payments.
Starting a Business is a complicated process but you have the list of accounting handling methods that surely help you to handle accounting problems to start a business this method always helps and contribute to your business’s success and development.