Why You Can't Ignore Accounting
"I'm a creative/developer/consultant, not an accountant!" We hear this a lot. But businesses run on numbers. If you don't know your numbers, you don't know your business.
5 Terms You Must Know
- Revenue (Income): Money coming IN from sales.
- Expenses (Cost): Money going OUT to run the business.
- Profit (Net Income): Revenue minus Expenses. (This is what you keep!)
- Assets: Things you own (Cash, Laptop, Inventory).
- Liabilities: Things you owe (Loans, Unpaid bills).
Cash vs. Accrual Basis
- Cash Basis: Record income when cash hits the bank. (Simpler, good for small SMBs).
- Accrual Basis: Record income when the invoice is sent, regardless of payment. (More accurate view of business health).
Tools of the Trade
You don't need a degree. You just need a system. Stop using shoeboxes for receipts. Use a digital tool to categorize expenses as they happen.