Small business accounting plays a crucial role in determining the success of a business enterprise. There are mainly three major financial steps involved in the management of the accounting details of a small business. These include cash flow statements, profit and loss, and balance sheets.
Typically, there are two methods that can be used for strategic business planning :
— The first method is the cash basis method involves the identification of cash receipts and payments of income as fees and charges seen as a burden. This method is used by most small business owners as it is not complicated and can be easily implemented.
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— In the second method named Accrual method, revenue is entered into the account books and does not rely on the collection of real money. If a sale is made, the product recorded in the books as "accounts receivable", it does not matter whether the amount already paid by the customer or not. Furthermore, if the amount received from the customer, "accounts receivable" turns into cash and registered in the accounting books.
The accounting software is designed for small businesses and their needs. With the help of this software, one can generate reports, store data and perform calculations and manage other accounting transactions easily. This software not only makes the job of the accountant of small companies easy to set up but also it is a very cost-effective option.