Selecting the right accounting method

Starting a business is a huge accomplishment and it will require a lot of time and effort on your part. If you aren't the best with your business books, look into hiring someone to manage them. Your business books are essential to the overall health of your company and you must maintain control of them. Choosing an accounting method will help you develop a stronger financial outlook for the business and it will help you save yourself a lot of time, money, and energy in the process.

Cash Accounting Method
A number of companies turn to the cash accounting method to manage their business books. The cash accounting method involves transactions between the customer and the company. Cash accounting means you record the numbers right away. Several programs out there like QuickBooks help you with the cash accounting method and they provide you with additional services as well such as payroll and invoicing.

QuickBooks is easy to use and you can have multiple employees using the program for reports and other information that they need to perform their jobs effectively. There are several versions of QuickBooks that you can turn to such as their online version that provides you with remote access to your books when you are away. There are larger version that includes inventory tracking and other features, all of which will help your company grow and develop. Using QuickBooks is essential to managing your books and it doesn't take a lot of time to learn, so you don't need to spend hours in training.

Companies that use the cash accounting method drive in less than one million dollars in revenue yearly. Having a good software program to go along with your accounting is a great option for your business to help you maintain control over the books.

Smaller companies love the cash accounting method as it helps them with emergency changes. Having the cash accounting method allows you to plan for the unexpected such as customers that place an order and back out of it last minute or when your equipment breaks down and you need to purchase new equipment.

Accrual Accounting Method
The accrual accounting method is another popular way to track your books. With the accrual accounting methods you will track your finances and transactions with your customers. With the accrual accounting method you will focus mostly on the business output versus the input. Tracking the output gives you a chance to see if your sales are productive and if your business is actually productive or if you need to spend some time on improving it.

Businesses like the accrual method because it gives them a chance to monitor their books better. You are focused on a number so you can cut costs and boost sales until you reach that number. Accounting programs will help you track all the details you need to have in order to keep your books under control and to position your company in a place to succeed. Always keep track of the dates as you may need this to prove numbers with the IRS during an audit. This will also help you track your profits so you don't struggle with your cash flow.

Meet with a CPA or financial advisor when you are trying to select and accounting method for your company. Both methods work well and they each have their own advantages and disadvantages. Cash accounting usually is better for smaller businesses as you need to focus more on the overall picture and details of the company. The accrual method is better for larger companies that need to focus on a set goal. Evaluate your business and the financial needs you have so you can select an accounting method that you are comfortable with.