Small business managers should educate themselves with basic accounting techniques. It is essential for a manager to have basic knowledge of the various aspects of finance. He/she should learn how to read financial statements. Financial statement usually reflect all the details about the money in the business; providing information where the money originated from and where it is. Basically, financial statements contain four important details which include the income statement, cash flow statement, statement of shareholders’ equity, and the balance sheet. Cash flow statements usually analyze the operating activities of the business, financial in and out flows, and investments. The balance sheet provides basic details on the firm’s liabilities, assets, and shareholders’ equity. Shareholders’ equity represents the finances through preferred and common shares. The income statement which is also referred to as profit and loss statement reflects the revenue earned within a specified period of time.

Separate business and personal finances

This generally entails getting a business credit and allocating all the relevant expenses on it. It is essential in helping business managers to keep track and control their outlays. Managers should open different accounts to ensure finances are separately accounted to avoid complexities in accounting for the profit and loss in the business.

Cut unnecessary cost

The main purpose of business to maximize profits; profits are maximized when costs are minimized. Businesses usually endure two types of costs i.e. variable and fixed costs. Fixed costs have to be borne irrespective of whether the business is making profit or loss. Therefore there is the scope for savings in the variable costs.

Monitor and measure the business performance

The business manager should keep on looking at the business financial performance in comparison with the past financial statements. This will help to project the business future revenue, cash flow, and expenses. Being aware of financial performance of the business is helpful too in making of informed decisions for the business.

Hire a professional

Hiring a professional accountant will always find more deductions and help keep the business from possible penalties. They can help in determining where the business is, and where it is heading to by analyzing the business data. Basically, accountants are helpful in computation of the exact tax which is payable to the government. These expertise can a long way in guiding managers and bring them peace of mind.

Invest in cloud based accounting software

The software provides real time insights since they allow managers to store, update, and access data from anywhere. They are convenient, error free, and reliable.