Finding Solutions for Growing Businesses

BOOKKEEPING

Instituting an internal bookkeeping system is one of the most important tasks you face as you start your business. Whether or not you use the services of a Certified Public Accountant (CPA) for the preparation of financial statements for tax purposes or to apply for a loan, you must still have a method of keeping track of your finances on a day to day basis. This internal record keeping allows you to better manage your business and will also serve as the source of information for your CPA or accountant. Therefore, it must be both accurate and timely.
The exact information you track will vary with your type of business. In general, any business should keep a record of the following information (when applicable):
The figures from these records, as well as others, will be used to produce your financial statements. These statements may be prepared by a CPA, or someone else knowledgeable in "Generally Accepted Accounting Practices" (GAAP). The consistency of these accounting practices allows you, your banker and accountant to all interpret your financial statements with a clear understanding of what is being show on them. There are two basic statements in a financial report:

Balance Sheet


Shows what the business owns (assets) and owes (liabilities) at a particular point in time. It may also be viewed as the statement which shows the sources of funds (liabilities and equity) and the uses of those funds (assets).

Profit and Loss Statement


Shows the flow of income of the business relative to its expenses for a given period of time. These statements can be prepared monthly, quarterly, or annually. Establishing an internal bookkeeping system is one of the first steps you will take in the practical management of your business. For assistance in developing a system that works for you, contact your CPA or call (313)964-1798 to identify a Small Business Development Center in your area.
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