Finance and accounting cover a broad range of business areas, all of which revolve around money and keeping track of it. All businesses are subject to federal and state taxation and reporting laws, Read more
Finance and accounting cover a broad range of business areas, all of which revolve around money and keeping track of it. All businesses are subject to federal and state taxation and reporting laws, and must keep records in the event they are audited. While these topics are dense and require in-depth study to understand fully, here are the basics of small business finance and accounting.
What are the most important small business finance topics to understand?
Businesses keep a list of all the employees and their salary information called a payroll. Businesses are responsible for paying their employees on time, for withholding PAYG tax, for superannuation contributions and for payroll tax.
As businesses earn and spend money, they need to follow proper business banking procedure to ensure they are setting up and using their accounts properly. Using business accounts improperly can result in difficulties at the end of the financial year.
What does a financially healthy business look like?
A financially healthy business is:
A financially healthy business is more likely to receive business loans and attract new partners. Businesses with strong financial records will also be easier to sell down the line. Businesses that stay on top of their financial affairs with strong, consistent processes are likely to have lower staff turnover, higher productivity and larger profits.
What sort of reporting and financial obligations do small businesses typically have?
Given the complexity and importance of meeting their financial and reporting obligations, many businesses hire bookkeepers and accountants to assist them in assessing and managing the financial health of their business. As a business grows, it becomes more and more important to ensure that the processes and record keeping practices are being adhered to precisely.