Four Big Accounting Decisions You Should Make as the Owner of a Growing Business in White Plains, NY
If you own a new and growing business, you may find accounting a taxing and complex topic. However, the accounting will keep your business afloat and prepare it for the unexpected. Your business will only survive if you have a strong accounting team behind it. As a business owner, you need to make the right initial decisions to set your business up for success. This includes working with an outsourced CPA in White Plains, NY. The following are the decisions you need to make for your growing business:
Monitoring Income and Expenses
Every business needs to have an established means to monitor income and expenses. Accounting software should be adjusted from the get-go, so you can quickly, easily, and accurately track data. Through accounting software that provides extensive processes for both account receivables and payables, you can be always confident that your company is getting money and paying invoices on time.
Monitoring Assets, Liability, and Capital
A new or growing business should be able to make financial reports such as balance sheets. This allows you to keep your business’s assets, liabilities, and capital under control. Assets include cash, equipment, and inventory, while liability represents what your business owes, like loans.
Using the right software allows for the easy creation of cash flow statements, so you can keep track of your company’s cash in-flow and out-flows. This provides you with a clear picture of the way your business spends money and the rate at which money is being received.
Setting a Budget
The budgeting process in business includes making plans as well as identifying opportunities to keep the business operating and speeding up growth. Once you establish an initial budget, you need to adjust this budget frequently with rolling forecasts. Typically, such forecasts extend six to twelve months into the future, so you can better allocate resources and manage through disruptions.
Picking an Accounting Method
As a business owner, you need to choose an accounting method you must abide by from the get-go. You must pick between accrual basis or cash basis accounting. The majority of organizations choose accrual accounting.
The main difference between these options is when expenses and revenue are recognized. Cash basis accounting tends to recognize expenses and revenue more quickly than accrual accounting. Accrual accounting concentrates on predicted expenses and revenues, while cash basis accounting focuses on recording transactions once cash changes hands.
Building an Accounting Department or Outsourcing
Your company’s accounting and bookkeeping functions will make sure you have the right data you need for making informed business decisions. While building an internal accounting department has many benefits, it costs more and does not have the scalability and flexibility that an outsourced accountant can usually provide.