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By Daniel Kehrer
Millions of small business owners and startup entrepreneurs are masters at creating great products and services, building awesome teams and winning over customers. Many of them, however, would probably flunk basic bookkeeping.
But if you – the business owner – don’t understand the different types of “accounts” your bookkeeper uses to organize your finances, measuring the success (or failure) of your efforts will be futile. Being deft at digital marketing, for example, isn’t enough if you don’t have a clear financial picture of your business and run headlong into cash flow problems.
What do your accounts receivable look like? Are you constantly paying your own bills late? Not sweating the small stuff like understanding your own books is trouble in the making, says Lita Epstein, who designs online courses about reading financial reports and is the author of Bookkeeping Kit for Dummies (Wiley, 2012).
Here are basics of the 10 most common types of bookkeeping accounts for a small business that you should know:
Many business owners think of bookkeeping as an unwelcome chore. But if you understand and make effective use of the data your bookkeeper collects, bookkeeping can be your best buddy, helping you run your business more effectively.
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Daniel Kehrer is Founder of BizBest (www.bizbest.com), an independent information service for small business and startups. © 2012 BizBest Media
The Service Corps of Retired Executives (SCORE) Chapter 68, is a locally-chartered volunteer association and resource partner of the Small Business Administration. SCORE Memphis offers free and confidential counseling to start up businesses and existing small businesses that seek advice. SCORE Memphis serves the Tennessee counties of Shelby, Tipton, Fayette and adjoining counties in Arkansas and Mississippi.
Memphis SCORE Chapter 68
Clark Tower, 5100 Poplar Avenue, Suite 1701
Memphis, Tennessee 38137