How to Assess If Your Small Business Is Making Money

I think the following raises some excellent points on how to assess if your small business is making money. I’ve included a few of the highlights for you to get the gist of the article: 

Running a small business can be both challenging and rewarding. Determining whether or not you are profitable is one of the keys to running a small business. You will need to understand basic accounting principles if you want to figure out whether your small business is generating an income or not. Fortunately, this is a relatively simple process for most business owners.

Track the money you receive from your business. There are two major systems of accounting--accrual-based accounting and cash-based accounting. Under accrual-based accounting, you add money to your total assets as you earn it. Under cash-based accounting, you don't add money to your list of assets until it is actually in hand. For most small businesses, cash-based accounting is best since this will give you a better indication of how much you actually earn each month. After receiving a payment, enter the payment amount in your accounting system, which can be a simple spreadsheet or software program.

Add up business expenses. On a cash-based accounting system, record expenses as you spend the money. All expenses that help you manage your business--from the rent for your office to the cost of goods you purchase for resale--needs to be listed. List all expenses that occur in the same time period you use to track your income.

What do you think? Maybe you’d like to read on? Check out the full version here then give me a call to discuss how this might impact your own business: (0467) 749 378. Alternatively, email me at [email protected].

Thanks,

Robert