Vital Importance Of Small Business Accounting Software

Every business functions through a range of disciplines, sales and marketing, operational skills, purchasing and management. A small business accounting software is also an essential tool to bring financial discipline to the business. No matter how skilled and well trained the business every small business needs a full range of functions to reach the highest levels of success.

The first lesson in business is to ensure that business has sufficient cash to trade the next day. Failing to meet this target and the business is finished which is why accounting and in particular accounting software should be regarded by the small business management as an essential piece of kit.

This comes in many guises some of which will be more suitable for a particular business than others. Nevertheless the choice to adopt a solid form of financial control is vital to ensure sales are higher enough to generate profits, margins are sufficient, costs are controlled, net profits are generated, cash flow is under control and losses can be identified and reversed or halted. No large business would survive without a sophisticated system of financial control and small businesses have the same requirements albeit on a different scale.

Many entrepreneurs who run a small business regard the accounting function and the recording of financial transactions as an administrative burden. Small business accounting software should not be viewed in this way but instead as a tool to assist the generation of safer stringer profits and the early warning system of dealing with problems if the business does not perform.

Use it to update the financial records at least once each month. With sales recorded every month peaks and troughs in performance are obvious and can then be examined to replicate those actions that produced higher sales levels and cut out those actions which produced lesser results. The result hopefully being sustained sales growth.

Record all the costs each month and as with sales the trend to higher costs or more efficient cost control will be evident from the financial accounts. Also of importance will be the profit margin being achieved and this can be viewed against the level of sales and justified. Statistically small businesses run by born salesmen achieve high sales but at the cost of lower margins while businesses run by accountants tend to achieve higher profit margins but with lower sales.

This statistical fact is true as is also the fact that most small businesses are run by neither accountants nor salesmen but by the skilled worker applying their trade or area of expertise. By using a small business accounting software the entrepreneur can judge what he would like the figures to show against what they actually show and take the necessary action to change the future and produce the desired result. Without accounting software the entrepreneur works in the dark depending on hunches rather than financial facts.

No matter how good or bad a business is the cash flow or lack of it might well determine future growth or in the worst case scenario, survival. Many small businesses that do not use a small business accounting solution package and run into difficulties have often been in financial problems for many months before it is obvious as reductions in profitability are hidden by extended credit from suppliers or tightening credit lines with customers.

It can indicate which parts of the business are doing well, where action is needed if underperforming and may also indicate where action needs to be taken. Accurate control of money owed in and money owed out is extremely difficult without the information to know how significant these figures are. But they can be critical for some businesses and using a small business accounting software that provides this information is crucial.

A disadvantage is that it may sound like a foreign language but it does not have to be so difficult. Accounting software using a database can require some bookkeeping skills to get the most out of the system but there are other alternatives. A solution written on excel spreadsheets that produces all the main requirements with all transactions visible can be an ideal solution for small businesses with little or no bookkeeping or accounting knowledge.

Home Based Business Considerations

A home based business allows you to be your own boss and to make all the decisions about the business. By running your business out of your home, you can enjoy flexible hours, certain tax advantages and not having a daily commute. When you are thinking about starting a business, you have to do some soul searching and planning. A home based business is no different from any other business; there are just different aspects to consider.

When beginning a home based business you will need to do so legally. You will need to decide the form of business you are going to undertake. These forms are a sole proprietorship, a partnership or a corporation. If you are going to use some other name than your own, you will need to register your business name with government agencies. You will also need to obtain a business license. The business will need to be run according to local, state and federal regulations.

The location of your home based business is very important. You will need to consider your house and neighborhood when beginning your business. Zoning laws are different for different areas of town. You will need to research the zoning laws for your neighborhood. The neighborhood will need to be suitable for the type of business you are beginning. You should also consider if your location will work for your business. Clients will need to be able to find your business with a minimum amount of trouble.

Your family and work style should be considered when planning a home based business. If your family is supportive of you in your business venture, working from home is idyllic. A lack of separation between your family and your business can interfere with family activities. It is a good idea to discuss your business with your family while you are still in the planning stages.

Another consideration when working from home is if it will work for you. Your personality and work preferences need to be analyzed while considering a home based business. Isolation and a lack of colleagues are increased with a home based business. Working from home requires self discipline. You have to be able to plan and manage your time. Your work style should include dealing with problems effectively.

An important determining factor in planning a home based business is your own personality. Do you have the qualities to be successful? The traits of a successful businessman or woman include competitiveness, a need to achieve, the desire to take the initiative, perseverance, and self confidence. Enthusiasm is a good work quality but it must be combined with determination to go down the road with success. Other qualities that will be useful in business are discipline, drive, flexibility, and the ability to meet new challenges head on.

The decision to start a home based business should not be a snap decision. It can be satisfying and thrilling owning your own business. Don’t let all the decisions scare you from make a choice that will free you from the daily grind. It is possible to have a successful home based business.

Retirement Investing – Use the Force Luke!

Retirement investing has one major question for everyone and I’d bet that if you ask 100 people the following question, you’ll receive close to 100 different answers.

What’s the question? Well, it’s not that hard.

It’s – “When is the right time to start investing?”

A simple question I’m sure you’d agree – but the answer can cost you a LOT of money – and the loss is purely down to how long you wait before you start saving!

Let me explain a little!

The honest fact is that nobody truly knows the right time to start investing for ‘random people’. So how do you know when it is your best time?

Well, to borrow a line from Star Wars, “Use the force Luke.”

Now the force in this answer isn’t some invisible cosmic energy, but instead is the investment force of compound interest.

First, it is very important to understand the difference between simple interest and compound interest. Simple interest can be figured by taking an initial investment that earns interest annually for a period of, for this exercise we will say, two years. After the first year you have your original investment plus the interest. In the second year you have the initial investment plus the interest for the second year, the interest from the first year is not added. Your interest is not being compounded so you are not earning interest on the interest that you have already earned.

This is what I’m talking about, this is the force. Compound interest is a force because you take that initial investment and earn interest in the first year, then in the second year you add the initial investment plus the interest from the first year and earn interest on the whole amount. The smart investor will always try to find a good situation with compound interest against a great situation with simple interest. With this knowledge it is time to see the difference between those who do use the force and those who do not use the force.

Bob starts saving at the age of 24 with a zero balance and contributes $200 monthly until retiring at the ripe old age of 65. By using an average annual rate of return of 12%, Bob can retire with $2,061,941.74. Bob will definitely be able to retire with comfort, the comfort of being a multi-millionaire!

Now let’s consider those who do not use the force.

Carl starts saving at the age of 40 and because dear old Carl is further in his life, we can assume that he started with an initial investment of $10,000 and contributes twice as much, $400 per month, with the same 12% average annual rate of return. Carl will retire at the same ripe old age of 65 that Bob did, but with a significantly smaller $886,803.53.

Now, that is definitely nothing to be ashamed of by any means and unless he has a very expensive habit such as buying first edition comic books – good old Carl is in for a happy retirement.

But it does demonstrate the importance of using the force!

Bob started younger, paid less, and used the force to the tune of almost three times as much money for retirement.

Now you have been empowered, you understand what the force is and how to use it. You understand the importance of starting early and earning on your money, then earning for your earnings.

Use the force! It’s no fluke Luke, I can assure you!