![]() ![]() Why accounting matters for your small business Accounting helps you plan for growthĮvery great journey begins with a roadmap. Talking about debts can be a sensitive, but necessary, conversation. Credit accountingĬredit accounting involves analyzing all of a company’s unpaid bills and liabilities to make sure that a company’s cash isn’t constantly tied up in paying for them.Ĭredit accounting can be one of the most difficult kinds of accounting to do well, in part because it’s a difficult subject to be critical about. It also feeds into financial accounting since costing data is often required when compiling a balance sheet. Whenever you’re trying to figure out how to increase your margin or deciding if raising prices is a good idea, you’re doing cost accounting.Ĭost accounting involves analyzing all of the costs associated with producing an output (whether it be a physical product or service) in order to make better decisions about pricing, spending, and inventory.Ĭost accounting is often a prerequisite of managerial accounting because managers use cost accounting reports to make better business decisions. ![]() Tax accounting is regulated by the Internal Revenue Service (IRS), and the IRS legally requires that your tax accounting adhere to the Internal Revenue Code (IRC). An example of this is when your accountant provides you with recommendations for how to get the most out of your tax return. Tax accounting is designed to make sure that you don’t pay more income tax than you are legally required to by the IRS. This is somewhat similar to the work a financial analyst might do, although a financial analyst will also look at past and current trends in the larger economy, not just your business, to inform their recommendations. You’ll be paying them to produce reports that provide regular updates on the company’s financial health and help you interpret those reports. ![]() If your business ever grows to the point where you need to hire an accountant full-time, most of their time will be taken up by managerial accounting.
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