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How Business Accounting Works


Keys to Success

The first step to making accounting fun is to get a grip on the terminology. If your heart skips a beat when someone asks about your balance sheet, you can calm yourself by learning exactly what a balance sheet is and how it can help you. We've added a glossary of accounting terms at the end of this article to get you over the hump.

Second, realize that accounting is more than numbers. It includes databases of your customers, your vendors, and your employees, if you have them. The information you keep on these people and companies will help you track your business and plan your future. With proper accounting, you might discover that people in the Florida Keys buy barrels of pork bellies in February. You can legitimately plan a sales trip for the entire month. See? This is getting interesting.

Third, the key to successful accounting is in the establishment of your accounting system and the reliable input of data. You will set up a system that is uniquely yours. Recording the transactions and information is called bookkeeping, and it must be done regularly. You won't get a good picture of your company if the paint (data) is stored in boxes in the basement. There is nothing harder than the task of going back to find and key in reams of old information. When you do, you stand a good chance of getting something wrong.