Online Business Accounting Basics
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Accounting is a factor of online businesses, especially small businesses, that is largely ignored until the necessity arises, and by then it can be a little late to make up lost ground. Whether you run an online small business or a multi-national corporation, a good knowledge of basic accounting is essential to you.
If you fail to maintain, adequate records of your financial affairs, and make important business decisions on inadequate financial information, your business could well fail before it even gets off the ground. It does not matter how good you are at What You Do, or if you have a fantastic product that the market wants, poor online business accounting practices could leave you destitute with no business to run.
Your financial records can be used to provide you with advance warning of things not going as they should, and enable you to take remedial action before going under. This is difficult for many entrepreneurs to understand, if they especially have a good product and what they consider to be a good business model. Financial statistics can show what might seem like insignificant trends, but that could be a Forewarning of Things going wrong.
There was a company that once offered 30 day terms, but their major customer was happy to pay fairly quickly in return for a small discount. This is common business practice. After about a year the major customer went into receivership owing the company a substantial sum of money, and since the receiver was unable to pay anything but a very small proportion of what was owed to each creditor, the company was forced to borrow money to remain solvent, and eventually went out of business about a year later. It was unable to recover from its major customer going into receivership.
There were two reasons for this of course, one being the loss of business from their major customer. However the main reason was the lost payments that their customer could not pay. They had to borrow to pay their own suppliers, and that was the beginning of the end.
Subsequent analysis indicated that the customer had defaulted fairly early on in the agreement to make quick invoice payments, and over time their payments had lengthened and lengthened. Eventually they owed over four months invoices which amounted to a Considerable proportion of the small business income. It transpired that the accounting was basic to say the least, and none of this had been noticed until too late in the process.
The customer had been requested payment after being two months overdue but was not put on stop because no information was passed on to production or dispatch areas, even though the business only employed just under 30 people. By the time the so-called late finance department put a stop on the account it was too.
This is an example of bad accounting and a lack of actions at critical points. With a good accountancy system, the slowdown in payments would have been logged and the situation monitored. The whole sorry tale could have been avoided if the correct information had been passed to those who should have known of the situation, particularly the owner who had no idea what was happening.
So what should you do to avoid this happening? Good online business accounting practices are easy to put in place and maintain. Many small businesses can not afford a full time accountant still, but apply good accounting practices. An example of this is the ‘double entry’ system, whereby you record each transaction twice. What you do is have two accounts, for every entry and enter it as a debit in one and a credit in the other. The sum of the two accounts as should always cancel each other out. If they do not then you should look for the error. That will be a good start.
Then you should always carry out analysis for each customer, and record the difference in time between invoicing and receiving payment. Once that time difference reaches a pre-determined warning level, then you must contact the customer. You should also have a stop level at which you stop supplying until payment is made. That is good accounting practice, and that way you will not allow a customer to become dangerously over credited – that applies irrespective of the size of the customer.
These are two simple ways for a small business to keep track of accounting errors and bad payment records of customers. Simple but essential, and they could be critical if you fail to stick to them. The company in my example (a real company incidentally) could still be going strong today had they applied the second of these two practices.
Even if you are too small for an accounting department, at least apply some simple basic accountancy principles, sufficient for you to keep track of your income and outgoings and Whether or not your customers are paying their invoices. That way you could save your company a lot of grief.
This article was published at Bookkeeping Services of Charlotte, NC Related Accountant Business Articles
Charleston Business Tax Accountant, Small Business Specialist
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http://www.sc-accounting.com – Hi, my name is Larry Wright and I am the Managing Partner at Ross WRIGHT Chason. We are a Charleston business tax accountant firm with offices also in Hilton Head, SC
We have been providing affordable Business Tax Accounting, Financial Management, Tax Planning & Preparation, and Business Intelligence services to small and mid-sized business owners and not-for-profit organizations throughout the entire low country since 2005.
http://www.sc-Accounting.com
One question many people ask is
What qualifications should I look for when choosing a Charleston business tax accountant and financial specialist?
There are five major areas you should look for.
Education is key.
The Charleston business tax accountant specialist needs to know the laws and requirements. Knowing accounting is simply not enough. Your accounting specialist should also have a broad education in business management. For example, with an accounting degree and an MBA from the Wharton School, we are better able to explore strategies that go beyond many accounting practitioners. This additional capability Allows us to identify and explore opportunities that can better assist in plotting your plans.
Next, your Charleston business tax accountant and financial specialist should have real-world Hands On Experience.
Having a portfolio of clients can not replace real world personal experience running a business. Changes in the buying habits of your market, how these habits are related to other markets and the economy in general are the key factors in making any decisions.
Being able to measure their behavior under both current and future conditions may mean the difference between surviving and thriving. Someone who has broad experience on both sides of the table will know what kind of data to look for, know how to capture it, and know what to do with it. So the real advice you get is not Merely theoretical but seasoned by practical, real world experience.
Next availability is important.
The Charleston business tax accountant specialist needs to be personally available to you. He / she is your go toÃ⠀ šÃ,  person. Often times, large firms can be guilty of relegating responsibility to juniors without adequate oversight. The importance of being there, being proactive and providing appropriate solutions where necessary when needed can not be overly-emphasized.
Number four: Flexibility is yet another important consideration when selecting a professional Charleston business tax accountant.
While his job is to identify, evaluate and (sometimes) recommend different options open to you, ultimately the decision remains with you. He must be able to accept your decision even if it differs from his recommendation. If he has done his homework, your choice will be a viable one, even if, in his opinion another would have been a better selection.
Resourcefulness is therefore crucial.
Knowing what information is needed, where to find it, how AND when to best use it is absolutely essential. While it is clear that your Charleston business tax accountant specialist works for and with you, his enthusiasm should be such that he IS your partner in this venture.
If you would like more videos and tips like this one, click on the link or go to http://www.sc-Accounting.com
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The Benefits of outsourcing Payroll Services
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Outsourcing payroll simplifies
payroll processing by putting the job in the hands of professionals. If your current payroll department is unable to keep up with your company’s needs or the entire project is too costly for your budget, payroll outsourcing is a viable solution. As with any outsourcing decision, it is important to be confident with the service provider as you are placing a lot of trust in their work. Thorough research to find a reputable payroll services provider is highly recommended. Here are some of the ways that outside hiring at payroll service can help you.
Payroll expertise: Some payroll providers cater to specific industries, and will know all of the industry specific tax and insurance regulations at local, state and federal levels. This type of industry experience is priceless. Although an employee can acquire this degree of specialization, the payroll service Reduced Costs: Security: Get the job done faster: Liability: This article was published at Bookkeeping Services of Charlotte, NC Find More Payroll Service Articles
