No idea is so great that you can avoid accounting for it.
Proper accounting is a necessary process for a successful entrepreneur to employ. You must keep detailed records of monetary transactions involved in the creation and sales of your business. Without them, you and your business will fail.
The Repercussions of Poor or Nonexistent Accounting Methods
You can incur hefty payments to parties owed money from your sloppy bookkeeping. In an extreme case, you could face protracted costs in time and money by employing a lawyer to fight a decision against you in court, and of course you may not win in the final decision.
Common Accounting Mistakes Entrepreneurs Typically Make
You regularly neglect to put aside enough money for estimated taxes which are normally paid by the 15th of Jan. April, July and Sept.
You fail to complete expense receipts for tax purposes.
You forget to record the source of checks deposited.
You do not have reliable systems to track billing or overdue payments.
You do not easily and accurately keep track of billable hours.
You have little idea of where your business stands with cash-flow, projections and profits.
You dip into business funds to cover your personal expenses.
If you do not perform any one of these tasks and cannot find the missing information to explain your activities, not only will you find it complicated, if not impossible, to calculate taxes on your business, you also could be hurt financially if you are ever audited for oversights. So how should you prevent this from happening?
Know the Foundations of Accounting, and How to Learn Them
You do not have to be a math whiz to become knowledgeable in accounting. The fundamentals can be learned in a semester at most community colleges and on some online schools as well.
The latter can be the best and most affordable option. A solid online program will allow you study at your own pace and convenience, so that you will be able to manage your studies without having them consume too much time from your business.
A good introductory accounting course will focus on the ways in which accounting principles are used in business operations. It should teach you how to identify and use:
Generally Accepted Accounting Principles (GAAP)
Ledgers and journals
Steps of the accounting cycle
Basics of bank reconciliation methods
Balance sheets and financial statements, including assets, liabilities and equity
If the online course is truly exceptional, you will have access to a wealth of other information on the subject matter as well as live tutorial support whenever needed, 24 hours a day, seven days a week. These benefits will allow you as much time as you need to absorb a subject that may but should not intimidate you.
Learning accounting while building your business is a smart move. It will provide you with a necessary tool to help expand your business in the future. Take the little extra time and effort to master it, and you will have an important edge over your competitors that can assure your success in the long run.