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Your Guide to Small Business Accounting

In simple terms, accounting is how the business organizes, records, and understands financial information. One can imagine accounting as a huge machine. You put all the raw finance information, business transaction records, projections, taxes, etc., and in return, you get a clean and simple business's financial state.

Accounting gives one an idea about the profit state, condition of cash flow, company’s liability and assets current value, and finally, which is the part of the business that gives you profit.


Bookkeeping and Accounting for SMBs

Bookkeeping and Accounting are similar in many ways. Few consider bookkeeping as one part of accounting. But when it is looked at from a different angle, bookkeeping categorizes and records financial transactions. But in the case of accounting, financial data is put through strategy, analysis, and tax planning.

Accounting Cycle

If you have any bookkeeping or accounting requirements, it is best to approach a top accounting firm Lake Mary, as they have exceptional knowledge in business accounting. The moment you enter the transaction of the business, Accounting is initiated. Any event or activity that demands or requires your business's money into the company's account gives way to accounting. Recording business transactions is part of bookkeeping, the first step of the accounting cycle. The accounting cycle has six main steps, and they are as follows:
  • Record and analyze transactions.
  • Ledger’s post-transactions
  • A refined trial balance must be prepared
  • Adjusting entries must be prepared at the period end
  • An adjusted trial balance must be prepared
  • Financial statements must be devised

Types of midsize and small business accounting

  • Financial Accounting – A financial statement is generated by the outside people of the company, like lenders, investors, auditors, etc. To prepare the annual statement of the company is known as Financial Accounting.
  • Managerial Accounting – It is just like Financial Accounting, but with two exceptions.
    -Managerial accounting produces a statement that is only for internal use.
  - They are more frequently generated, mostly monthly or quarterly.                
  • Tax Accounting – The accountant recommends you as to how you can get the most from the Tax Returns. This is called Tax Accounting.
  • Cost Accounting – Cost Accounting is done when you are trying to figure out the margin increase or deciding the price raise.
  • Credit Accounting – It involves all the liabilities and unpaid bills of the company and ensuring that the company's cash is not tied up in the payments of the credits.
So, if you are facing any doubts regarding any accounting process or small business accounting, it is recommended to approach a leading accounting firm in Lake Mary, FL.
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