One might be led to believe that profit may be the main objective in a business but in reality it’s the money flowing in and out of a business which will keep the doors open. The idea of profit is somewhat narrow and only talks about expenses and income at a certain point in time. Cash flow, however, is more powerful in the sense that it is concerned with the movement of money in and out of a business. It is concerned with enough time of which the movement of the money takes place. Profits do not necessarily coincide with their associated dollars inflows and outflows. The net result is that funds receipts often lag cash repayments and while profits may be reported, the business enterprise may experience a short-term money shortage. For this reason, it is vital to forecast cash flows along with project likely revenue. In these terms, it is very important know how to convert your accrual revenue to your money flow profit. You should be in a position to maintain enough cash readily available to run the business, however, not so much as to 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 hire a team of employees
Learn how to price your products
Know how to label your expense items
Helps you to determine whether to grow or not
Helps with operations projected costs
Stop Fraud and Theft
Control the largest problem is internal theft
Reconcile your books and stock control of equipment
Raising Capital (allow you to explain financials to stakeholders)
Loans
Investors
What are the GUIDELINES in Accounting for Small Businesses to handle your common ‘pain points’?
Hire or consult with CPA or accountant
What is the simplest way and how often to get hold of
What experience do you have in my industry?
Identify what’s my break-even point?
Can the accountant measure the overall value of my business
Is it possible to help me grow my enterprise 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 your business objectives boil right down to this one inescapable fact. But turning a profit is simpler said than done. So that you can boost your bottom line, you need to know what’s going on financially constantly. You also need to be committed to tracking and knowing 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 should absolutely need to keep track of at all times:

Outstanding Accounts Payable: Exceptional accounts payable (A/P) shows the total amount of cash you now owe to your suppliers.
Average Cash Burn: Average income burn is the rate of which your business’ cash balance is certainly going down on average every month over a specified time frame. A negative burn is a good sign because it indicates your business is generating cash and growing its cash reserves.
Cash Runaway: If your business is operating at a loss, cash runway helps you estimate how many months you can continue before your organization exhausts its cash reserves. Similar to your cash burn, a poor runway is a good sign that your business keeps growing its cash reserves.
Gross Margin: Gross margin is really a percentage that demonstrates the full total revenue of your business after subtracting the costs connected with creating and selling your company’ products. It is a helpful metric to identify how your revenue compares to your costs, letting you make changes accordingly.
Customer Acquisition Cost: By knowing how much you spend typically to acquire a new customer, it is possible to tell how many customers you should generate a profit.
Customer Lifetime Value: You must know your LTV so that you could predict your future revenues and estimate the full total number of customers you have to grow your profits.
Break-Even Point:Just how much do I need to generate in revenue for my company to make a profit?Knowing this number will show you what you need to do to turn a income (e.g., acquire more customers, increase prices, or lower operating expenses).
Net Profit: This 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 organization isn’t going to survive for long.
Total revenues comparison with previous year/last month. By monitoring and comparing happy ending massage over time, you’ll be able to make sound business judgements and set better financial aims.
Average revenue per employee. It is critical to know this number so as to set realistic productivity ambitions and recognize ways to streamline your business operations.
The next checklist lays out a advised timeline to take care of the accounting functions that will continue to keep you attuned to the functions of one’s business and streamline your tax preparation. The precision and timeliness of the quantities entered will affect the main element performance indicators that drive enterprise decisions that need to be made, on a daily, monthly and annual base towards profits.
Daily Accounting Tasks

Review your daily Cash flow position and that means you don’t ‘grow broke’.
Since cash is the fuel for your business, you won’t ever 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 buyers, paying vendors, etc.) in the proper account daily or weekly, based on volume. Although recording transactions manually or in Excel sheets is acceptable, it is probably simpler to use accounting computer software like QuickBooks. The benefits and control far outweigh the cost.

3. Document and File Receipts

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

Start a vendors record, sorted alphabetically, (Sears under “S”, CVS under “C,”and so on.) for easy access. Create a payroll document sorted by payroll time and a bank statement document sorted by month. A common habit would be to toss all paper receipts into a box and try to decipher them at tax time, but unless you have a small level 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 avoid physical files altogether

4. Review Unpaid Expenses 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 deadline. 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 have funds earmarked to cover your suppliers on time to avoid any late fees and keep maintaining favorable relationships with them. When you are able to extend due dates to net 60 or net 90, the higher. Whether you make payments on the internet or drop a sign in the mail, keep copies of invoices sent and received using accounting software.