One might be resulted in believe that profit may be the main objective in a small business but in reality it’s the dollars flowing in and out of a small business which keeps the doors open. The idea of profit is considerably narrow and only looks at expenses and income at a certain point in time. Cashflow, however, is more powerful in the sense that it’s worried about the movement of money in and out of a business. It is concerned with enough time at which the movement of the amount of money takes place. Profits do not necessarily coincide with their associated funds inflows and outflows. The net result is that dollars receipts often lag cash payments even though profits may be reported, the business enterprise may experience a short-term money shortage. For this reason, it is essential to forecast cash flows as well as project likely gains. In these terms, you should know how to convert your accrual income to your money flow profit. You need to be in a position to maintain enough cash on hand to run the business, but not so much as to forfeit possible earnings from different uses.

Why accounting is needed

Help you to function better as a business owner

Make timely decisions
Know when to hire a team of employees
Understand how to price your products
Understand how to label your expense items
Allows you to determine whether to grow or not
Helps with operations projected costs
Stop Fraud and Theft
Control the largest problem is internal theft
Reconcile your books and inventory control of equipment
Raising Capital (allow you to explain financials to stakeholders)
Loans
Investors
What are the Best Practices in Accounting for Small Businesses to address your common ‘pain points’?
Hire or check with CPA or accountant
What is the best way and how often to get hold of
What experience do you have in my industry?
Identify what’s my break-even point?
Can the accountant measure the overall value of my business
Is it possible to help me grow my organization with profit planning techniques
How will you help me to get ready for tax season
What are some special factors for my particular industry?

To succeed, your company should be profitable. All your business objectives boil right down to this one inescapable fact. But turning a profit is easier said than done. In order to boost your bottom line, you must know what’s going on financially at all times. You also need to be committed to tracking and understanding your KPIs.
Do you know the common Profitability Metrics to Track in Business — key performance indicators (KPI)

Whether you choose to hire an expert or do-it-yourself, there are some metrics that you ought to absolutely need to keep tabs on at all times:

Outstanding Accounts Payable: Excellent accounts payable (A/P) shows the balance of cash you presently owe to your suppliers.
Average Cash Burn: Average money burn is the rate of which your business’ cash balance is going down on average every month over a specified time period. A negative burn is a great sign because it indicates your organization is generating money and growing its income reserves.
Cash Runaway: If your organization is operating at a loss, cash runway helps you estimate how many months you can continue before your organization exhausts its cash reserves. Much like your cash burn, a poor runway is a great sign that your business is growing its cash reserves.
Gross Margin: Gross margin is a percentage that demonstrates the total revenue of one’s business after subtracting the expenses connected with creating and selling your organization’ products. It is just a helpful metric to identify how your revenue compares to your costs, enabling you to make changes accordingly.
Customer Acquisition Cost: By knowing how much you spend normally to get a new customer, it is possible to tell exactly how many customers you have to generate a profit.
Customer Lifetime Value: You have to know your LTV so that you can predict your future revenues and estimate the full total number of customers it is advisable to grow your profits.
Break-Even Point:Just how much do I need to generate in sales for my company to make a profit?Knowing this number will highlight what you must do to turn a income (e.g., acquire more customers, increase prices, or lower operating expenses).
Net Profit: Here is the single most important number you should know for your business to become a financial success. In the event that you aren’t making a profit, your company isn’t likely to survive for long.
Total revenues comparison with last year/last month. By monitoring and comparing your overall revenues over time, you’ll be able to make sound business selections and set better financial ambitions.
Average revenue per employee. It is critical to know this number to be able to set realistic productivity ambitions and recognize ways to streamline your business operations.
The next checklist lays out a suggested timeline to take care of the accounting functions which will retain you attuned to the procedures of your business and streamline your tax preparation. The accuracy and timeliness of the numbers entered will affect the key performance indicators that drive organization decisions that need to be made, on an everyday, monthly and annual basis towards profits.
Daily Accounting Tasks

Review your daily Cashflow position which means you don’t ‘grow broke’.
Since cash is the fuel for your business, you never desire to be running near empty. Start your day by checking how much cash you have on hand.
Weekly Accounting Tasks

2. Record Transactions

Record each transaction (billing customers, receiving cash from buyers, paying vendors, etc.) in the correct account daily or weekly, based on volume. Although recording transactions manually or in Excel bedding is acceptable, it really is probably easier to use accounting computer software like QuickBooks. The huge benefits and control far outweigh the price.

3. Document and File Receipts

Keep copies of all invoices sent, all money receipts (cash, check and credit card deposits) and all cash obligations (cash, check, charge card statements, etc.).

Start a vendors data file, sorted alphabetically, (Sears under “S”, CVS under “C,”and many others.) for easy access. Develop a payroll file sorted by payroll time and a bank statement document sorted by month. A common habit is to toss all paper receipts into a box and try to decipher them at tax period, but unless you have a small level of transactions, it’s easier to have separate data files for assorted receipts kept arranged as they can be found in. Many accounting software systems let you scan paper receipts and prevent physical files altogether

4. . Review Unpaid Charges from Vendors

Every business must have an “unpaid suppliers” folder. Keep a record of each of one’s vendors that includes billing dates, amounts owing and payment deadline. If vendors make discounts available for early payment, you might want to take advantage of that if you have the cash available.

5. Pay Vendors, Sign Checks

Track your accounts payable and have funds earmarked to cover your suppliers on time to avoid any late fees and keep maintaining favorable relationships with them. For anyone who is able to extend payment dates to net 60 or net 90, the better. Whether you make payments on the internet or drop a check in the mail, keep copies of invoices sent and received using accounting software program.