Accrual Accounting

What is accrual accounting? How might it affect your business? If you use them in your small business?
Let's start with basic definitions. Accrual accounting income and expenses are recorded at the event, not a transfer payment. Revenue is recognized when it is received, not when payment is received. Expenses are recognized when incurred, even if you have a 12 month payment plan.
So, how might this affect your business? Let's look at some examples.
Profit Before Recording Payments ReceivedA good example would be sales generated with Net 30 payment terms. In accrual accounting as soon as the physical product have been submitted you will book revenue. Your income will include income even if you do not receive the money. Sounds great right? Not so fast. Let us consider the other side.
Waiting For the Record Revenue Even When Payment ReceivedIt makes no sense right? If they pay you, well hey they pay you! But if you get it? You may be thinking well sure, not like I was stealing money.
In accounting earn revenue means that you have done all the services that were promised for money received. Let us take a prepaid gym membership. You run the gym, and costs $ 1,200 per person, payable in advance, for 12 months membership. In accrual accounting you will not book the entire $ 1,200 as income immediately. You have not provided the service or not. Instead you order $ 100 per month every time you provide this service.
The goal of accrual accounting is to reflect the business activities at a particular time point.

• Benefits of Accrual Accounting for More accurately match revenues and expenses at a particular point in   time, give a better picture about the health of your business 
• Great reminder you still need to provide service to hang onto your cash
• Making a reality check for the cost of purchased on credit
• Lack of Accrual Accounting you may end up paying tax on income before you actually receive cash
• Significantly more difficult to reduce taxes by accelerating or delaying spending
• It's easier to forget the fact that some of your income is not money in the bank
• Tracking and reporting more complex than cash accounting

It is important to note that the accrual accounting may become necessary depending on the type of business you run, and legal structure. Additionally, if your business has revenues of more than $ 5 million, you may be required to use accrual accounting. To determine whether there situations applies to you, be sure to consult a professional. If there is no requirement, it will be important to consider the benefits, and constraints in relation to your business, before deciding whether accrual accounting is right for you.
Small Business Financial expert Nicole Fende offers down to earth tools, tips and advice for entrepreneurs, independent consultants, artisans and small businesses that established that wants to expand their business, reduce costs, and increasing business profit

Effective Small Business Strategy

A little organization with your small business can get you a long way. A business strategy, also called a business plan, can help you plan and stay on track with your business. Strategic planning allows you to organize exactly what you want out of your business:

    * where is your business going
    * will you be growing your business
    * will your business stay the same size
    * what is your ultimate goal for your business
    * what do you consider a successful business
    * how will you measure this success
    * what path will you take to reach your success
    * what kind of market/customers will you target

Benefits of Strategic Planning for Your Small Business

While organization is a main benefit for strategic planning, there are many other benefits. Everyone has a business plan in mind when they decide to open a small business, strategic planning takes that plan and puts it on paper. Some benefits to doing this are:

    * allows you to see if you really can make your small business work
    * creates a business resume, an important tool to have when presenting your business to others
    * outlines a timetable of operations
    * creates a model of what you want your business to become
    * outlines the process you will use to create a successful business
    * allows you to plan for the future while keeping the present in mind

New Business Sales Strategy

Strategic planning is not just for the overall operation of your business. Having a sales strategy also provides many benefits by allowing you to plot out how to approach customers. A sales strategy can help you outline:

    * who do you want to target as customer
    * what vendors (if any) would you go through to reach customers
    * are you looking for long term customers or constant new customers
    * what associations do you belong to/should you belong to that can help you reach customers

Marketing Strategy

Having a marketing strategy can help you keep short- and long-term objectives in mind. A good marketing strategy allows you to make specific goals and then accomplish those goals. You can decide how each marketing event will play out by looking at:

    * the description of the event
    * the time of the event
    * the goals and objective of the event
    * the cost of the event

While this is just a general guideline to a good small business strategy, it should get you going in the right direction. Good luck!