RISING WOMEN EXPERTS...

How important is a good accounting system for my business?
    By Donette Hamula of Padgett Business Services

“Revenge of the math club” is how many independent business owners view the need for accounting. Unfortunately, this may result in the owner totally ignoring the entire process and using other tools to run her business. We say unfortunately because accounting, and the products of accounting, can assist you in the operation of your business. Just as you have had to learn other skills to be successful - personnel, law and purchasing, for example - learning a little about the process and products of accounting will make you more powerful as a business owner. Your company probably represents your major personal investment and/or your retirement plan, so it is worth the time and effort to better understand what accounting can do for you. Accounting can be turned from a dreaded past-time into something that can give you more control over your day-to-day activity. While it’s realistic to say that you may not actually enjoy it, it should become another part of your monthly routine.

Accounting is a language of numbers. The process of accounting seeks to reduce the activities of every business to a common measurement - the dollar. By doing this, it allows comparisons of such diverse activities as advertising, banking and the buying of inventory to be expressed in such a way as to make them comparable. In doing this it will give you clues as to what happened in a business, and, given that things remain the same, what will happen in the future. The language of accounting also allows other parties to better understand what you do within your business. These other readers (bankers, suppliers, investors) need a summary picture of what took place and how well you are doing.

Financial statements are the products of accounting. These statements are primarily developed to assist you in running your business. Expressed in a common format - dollars - it shows the results of every decision you have made in the past, so that you can make decisions about the future. These are the major benefits of financial statements. Other purposes are to allow you to file an income tax return, to seek additional funding with your lender and to eventually attract a buyer or investor in your business. These other considerations are secondary, however, to the major role of financial statements and accounting in general, which is to assist you in doing better in your business.

For more accounting advice, contact Donette Hamula of Padgett Business Services at 403.235.3505 or email info@padgettaccounting.ca  To learn more about Donette’s services, visit www.padgettaccounting.ca