One might be resulted in believe that profit is the main objective in a business but in reality it is the funds flowing in and out of a business which keeps the doors open. The concept of profit is somewhat narrow and only talks about expenses and income at a particular point in time. Cash flow, however, is more powerful in the sense that it is concerned with the movement of profit and out of a small business. It is concerned with the time of which the movement of the money takes place. Profits usually do not necessarily coincide making use of their associated funds inflows and outflows. The net result is that money receipts often lag cash payments even though profits may be reported, the business enterprise may experience a short-term cash shortage. For this reason, it is essential to forecast cash flows in addition to project likely revenue. In these terms, it is very important learn how to convert your accrual earnings to your cash flow profit. it services You should be in a position to maintain enough cash on hand to run the business, but not so much concerning forfeit possible earnings from other uses.

Why accounting is needed

Help you to function better as a business owner

Make timely decisions
Know when to employ a team of employees
Understand how to price your products
Understand how to label your expense items
Allows you to determine whether to broaden or not
Supports operations projected costs
Stop Fraud and Theft
Control the biggest problem is internal theft
Reconcile your books and inventory control of equipment
Raising Capital (assist you to explain financials to stakeholders)
Loans
Investors
What are the Best Practices in Accounting for Small Businesses to address your common ‘pain points’?
Hire or consult with CPA or accountant
What is the best way and how often to contact
What experience do you have in my industry?
Identify what is my break-even point?
Can the accountant measure the overall value of my business
Is it possible to help me grow my business with profit planning techniques
How can you help me to get ready for tax season
What are some special factors for my particular industry?

To succeed, your company should be profitable. All of your business objectives boil down to this one simple fact. But turning a profit is simpler said than done. To be able to boost your bottom line, you have to know what’s going on financially all the time. You also need to be committed to tracking and knowing your KPIs.
What are the common Profitability Metrics to Track running a business — key performance indicators (KPI)

Whether you choose 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: Excellent accounts payable (A/P) shows the balance of cash you currently owe to your suppliers.
Average Cash Burn: Average cash 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 cash and growing its income reserves.
Cash Runaway: If your organization is operating baffled, cash runway helps you estimate how many months it is possible to 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 really a percentage that demonstrates the full total revenue of your business after subtracting the expenses associated with creating and selling your business’ products. It is just a helpful metric to identify how your revenue compares to your costs, allowing you to make changes accordingly.
Customer Acquisition Cost: By knowing how much you spend typically to acquire a new customer, it is possible to tell exactly how many customers you should generate a profit.
Customer Lifetime Value: You have to know your LTV so that you can predict your own future revenues and estimate the total number of customers you should grow your profits.
Break-Even Point:Just how much do I need to generate in sales for my company to make a profit?Knowing this number will highlight what you must do to turn a earnings (e.g., acquire more customers, increase prices, or lower operating expenses).
Net Profit: This can be the single most important number you have to know for your business to be a financial success. In the event that you aren’t making a profit, your company isn’t going to survive for long.
Total revenues comparison with last year/last month. By tracking and comparing your total revenues over time, you’ll be able to make sound business judgements and set better financial aims.
Average revenue per employee. It’s important to know this number so that you could set realistic productivity aims and recognize methods to streamline your business operations.
The following checklist lays out a suggested timeline to take care of the accounting functions which will keep you attuned to the functions of one’s business and streamline your tax preparation. The accuracy and timeliness of the figures entered will affect the key performance indicators that drive business decisions that require to be made, on a daily, monthly and annual base towards profits.
Daily Accounting Tasks

Review your daily Cash flow position so you don’t ‘grow broke’.
Since cash may be the fuel for your business, you never desire to be running near empty. Start your entire day by checking how much cash you have on hand.
Weekly Accounting Tasks

2. Record Transactions

Record each transaction (billing customers, receiving cash from consumers, paying vendors, etc.) in the proper account daily or weekly, depending on volume. Although recording transactions manually or in Excel sheets is acceptable, it really is probably better to use accounting software like QuickBooks. The huge benefits and control far outweigh the price.

3. Document and File Receipts

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

Start a vendors file, sorted alphabetically, (Sears under “S”, CVS under “C,”and so on.) for easy access. Develop a payroll data file sorted by payroll date and a bank statement file sorted by month. A common habit is to toss all paper receipts into a box and try to decipher them at tax moment, but if you don’t have a small volume of transactions, it’s easier to have separate documents for assorted receipts kept arranged as they come in. Many accounting software systems let you scan paper receipts and steer clear of physical files altogether

4. Review Unpaid Bills from Vendors

Every business must have an “unpaid suppliers” folder. Keep an archive of each of your vendors that includes billing dates, amounts due and payment due date. If vendors make discounts available 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. In case you are able to extend due dates to net 60 or net 90, the better. Whether you make payments on line or drop a sign in the mail, keep copies of invoices sent and received using accounting application.