It might not feel like the most exciting part of entrepreneurship, but accounting is an essential business activity, whether you’re a business owner or a blogger trying to earn some extra money.
If you want to make money with your business or side hustle, you need to know how to manage it. Learning to do this is one of the benefits of a certified bookkeeper course.
Why accounting for entrepreneurs matters
Whatever size of business you have, you can’t afford to blow the budget or rack up debts that your business can’t repay. You also can’t afford to ignore your sales and profits if you want your business to succeed.
Even the most basic accounting skills can help freelancers to stay on track and keep all business dealings above board. Budgeting, bookkeeping, and financial literacy will help you to stay within budget. Financial skills also give proof of a business’s profitability. If, as a start-up owner, you can show financial returns on your investors’ contributions, you can satisfy important stakeholders and keep their trust.
Also, bookkeeping is a way to literally keep the books. It’s a way to keep your finances organized, accurate, up-to-date, and accessible. If you have good financial management habits you will have all of your essential accounting information to hand. When you need to file taxes, pitch to investors, secure business loans, or work out profit margins, you’ll be prepared.
Use accounting to plan for the future. Use financial metrics to predict your earnings and operating costs. These predictions mean you can strategize how you can reach your business goals. When financial shortcomings happen, forecasting can help you to make corrections. Savvy entrepreneurs use accounting strategies to make sure that process and performance are aligned with profit-making.
Accounting skills entrepreneurs need to learn
Many startup owners don’t have the resources to hire an accountant. Even those who are able to should still learn business accounting basics. Hands-on experience in accounting will help you to confidently hand over the responsibilities to a professional accountant. You’ll also be able to discuss and understand financial goals.
Even in the early stages of a business, accounting is a strategic tool and essential skill set. Start-up business owners or freelancers are in charge of all their business dealings and operational activities. This includes keeping track of accounts. But what type of skills do you need to master?
You must be able to capture profits and losses in income statements, record and classify all of your expenses, prepare tax documents, and more. You could rely on a basic balance sheet, cloud-based accounting software, or third-party accounting services. Either way, you should be familiar with some accounting responsibilities such as:
- Accounts payable
- Accounts receivable
- Cash-flow management
- Expense reporting
- Financial forecasting
- Fiscal reporting
- Loans and grants
- Tax filing
It takes many years of education and experience to totally master everything there is to know about accounting, so know when you outsource to a third party instead of tackling it yourself.