“One is the loneliest number that you’ll ever do / Two can be as bad as one / It’s the loneliest number since the number one” — “One” by Three Dog Night Too often, you limit yourself to too small a set of outcomes. The worse is that you can only imagine one. Mostly you think of two because you tend to think in binary terms: A or B, yes or no, this or that. ...
Only a handful of financial metrics are needed to understand a company’s health. You can certainly get fancy and go crazy with ratios, charts, and dashboards, but keeping it simple will get you 80% to understand your company. Cash balance Knowing the cash balance daily helps you understand if you have enough to fund operations. It’s a good indicator of whether you must ramp up cash collections or slow down cash expenditures. ...
Here’s why I (naively) thought I had the perfect background to run a business: I spoke the “language of business” - I even have an accounting degree. I’m a certified accounting expert - I have my CPA license. I’m a financial reporting expert - I worked in public accounting as a financial statement auditor. My clients reported their financial statements to the Securities and Exchange Commission. My job was to check the financial statements and say they were good. When I started Basis 365 Accounting, I thought these would help me master my business. These things helped, but I realized they’re only a small part of running a business. ...
I’ve operated an accounting firm for over a decade, and during that time, business owners have come to us with the same story: “My bookkeeper just quit, and I have two weeks to find a new bookkeeper.” What’s even worse is that there has to be a knowledge transfer between the bookkeepers within those two weeks! When hiring a bookkeeper, ask these 3 interview questions to minimize the risk of this happening to you. ...
Financial statements are made of small building blocks. To understand the financial statement and make better business decisions, you must understand how the building blocks fit. Accounts are the smallest building blocks. Accounts, sometimes called general ledger accounts, are the smallest building blocks. It’s where your transactions are recorded. For example, when you spend money on office supplies, you’ll record it in an Office Supplies account. Accounts are grouped in broad categories and numbered: ...
