Keeping accurate track of your business activities will help you in a number of ways.  It is an essential tool for managing the business – learning how profitable the business is, which product or service lines are most profitable, which expenses are getting out of hand, and whether sales are increasing over time.  Good record keeping is essential for meeting tax obligations.  It is important to keep accurate records to support your tax filings in the case of an audit.

Businesses summarize their financial status through a Financial Statement.  The Financial Statement consists of a Balance Sheet and an Income Statement.  The Balance Sheet lists the assets and liabilities of the company.  The Income Statement, also called a Profit and Loss (P&L), shows all of the income and expenses over a specific period of time.  When you set up your business finances with a software program, you will create account numbers, which are simply categories to which you assign all of the various expenses and income for the business.  A good software program will calculate and print the Financial Statement for you.  This is a great way to track how you’re spending your money and look for ways to save.  As you become more comfortable with using the software, you will begin to use it for accounts receivables (what your customers owe you), accounts payable (your unpaid bills), payroll, and much more.

There are many good tools to help you track the financial aspects of your business. The SCWBC can recommend some software packages and help you get started using them.  We offer training courses on financial record keeping and using financial software packages.

Getting Started

If you are starting a new business, follow our proven four step plan
If you are expanding a business, request a consultation with a business coach.