Handling the finances for a business can be a difficult task when you aren’t familiar with the basis of accounting. Whether your business is large or small, having an understanding of financial matters is critical to your success. Even if a large business employs a department to handle the accounting tasks, it is still important to know the basics in order to effectively communicate.
If you have a small business, you might be the one tasked to manage all of the accounting yourself. Either way, it is time to go about learning the ins and outs of the numbers.
Accounting vs. Bookkeeping
The first thing to comprehend is the difference between accounting and bookkeeping. While the terms might be used interchangeably, they are not quite the same. Bookkeepers are in charge of recording the money that comes in and the money that goes out. They “keep the books.”
An accountant then takes that information and analyzes it by doing audits, creating reports and graphs, and presenting financial statements. Sometimes the bookkeeper and accountant work together and other times, they are just one person. An accountant might have a certification from the state or a higher degree than the bookkeeper due to the increase in functions.
While you are in the process of learning, it is crucial that you have an accountant for your business to ensure you are properly taking care of your financial requirements. They can work as a consultant helping you through the process and making sure nothing is missed.
Know Your Spreadsheets
Trying to make your way around accounting information would be problematic without knowing the basics of an Excel spreadsheet. Being familiar with columns, rows, and cells is the foundation, but learning how to do calculations, create graphs and charts, and learning some fundamental functions in Excel, or another spreadsheet software like Google Sheets is critical. Fortunately, there are many free videos and courses online to help. Many companies offer free Excel training because they know the value it brings in increased productivity.
Reading books on accounting and taking free courses online is a great way to beef up your knowledge of financial topics. A few suggestions for books are Introduction to Accounting by Marriott, Edwards, and Mellett and Financial Statements: A Step-by-Step Guide to Understanding and Creating Financial ReportsbyIttelson. Both of these books are considered a few of the best entry-level books by those who are familiar with the industry.
Sometimes you can find a night or weekend course to take at your local community college, but you can also take courses for free on the internet. Try MOOCs (Massive Open Online Courses) which feature lectures and power point presentations from some of the best educators in certain topics. Or there are online platforms like YouTube with experts who have thousands of followers. These videos are usually short enough that you can master a few concepts in a short amount of time, so it is a great way to build on what you already know.