Basic Accounting

Business owners, especially small business owners, need a cash flow management process in place for their business. It is critical to know how much money comes in and how much money goes out so you can increase your success and avoid failure. You can set up a simple & easy cash flow management process by utilizing an Easy Money Management System.

Your Money Management System can be done electronically on excel or Lotus 1-2-3 software or through using a manual ledger/spreadsheet. No matter which method you use, your money management system must first include:

Key #1, which is having an organized filing system.

This filing system is where all your physical documents and statements of your income, expenses and any business related documentation should reside. Your filing system is of major importance because every transaction expense you have for a business must be documented. You have to have some form of documentation (back up) for that expenditure, as this is a requirement for tax preparation.

Your documentation enables you to prove to the IRS that you truly bought or purchased the expenditure in question, thus providing proof if you should be audited by the IRS (if here in the USA) or your government taxing authority. Your business must provide these physical documents, so include them in your filing system from day one.

What are the other key components needed in your Cash Flow Management process? There are three more key components you should include. Let’s look at each component in detail.

Cash Flow Management Component #1: You need a monthly expense report. This report would include your daily payment (purchases) activities. If you purchase something for your business then you would document the purchase in your expense report. You would document what the expense is (if it’s office su Read more