When it comes to small business accounting in Phoenix, there are a lot of things people simply don’t know. What is the difference between financial and managerial accounting? What are assets and liabilities? It’s these types of questions that PayTech believes everyone should know about small business accounting in Phoenix. Here is a list of our top 5 things you may not know in no particular order.
Financial vs. Managerial
There are typically two main objectives in accounting. Financial accounting is where the accountant presents externally to banks, investors, and the government. Then there is Managerial accounting. This is used internally for keeping track of financial obligations. For example, with managerial accounting you would enter each day’s sales and expenses, while in financial accounting you would be making a summary of those transactions made. PayTech is in the business of all aspects of small business accounting in Phoenix, so if you’re worried about your accounting services, give us a call.
Assets & Liabilities
Assets and liabilities are the very foundation of accounting. Your assets include anything and everything that you own. Items such as your car, home, factory, and equipment all qualify as your assets. Liabilities are everything you owe. A majority of people simply have loans that qualify as liabilities. A lot of the time, your transactions will increase in both areas. When you are a business owner and you get a loan to buy a building, you have increased your assets as well as your liabilities.
Credit vs. Debit
Believe it or not, we’re not talking about those cards you carry around. In accounting, credit, or Cr, is an entry that increases your liabilities while debit, or Dr, is an entry that increases your assets. A debit usually means adding a positive number to an account and a credit will normally add a negative number to an account. When written in a ledger, credit is traditionally written on the right side and debit is written on the left. If you don’t want to deal with ledgers, credits, and debits, give the ledger wizards at PayTech a chance.
A balance sheet is the snapshot of a business and states how much assets are there in different categories. You will see categories like, buildings, bank accounts, equipments and the amount you need to receive from customers. The balance sheet also shows how many liabilities are there in their respective categories. Items such as short and long term loans and how much you need to pay your suppliers. The last thing that a balance sheet does is show the overall ownership equity. This means how much money was from the owners and how many shares of the company are held.
Accounting Is Not An Exact Science
Contrary to popular belief, small business accounting is not an exact science that uses a set system. It does have certain aspects that are the same when practiced correctly but there are also unknowns. For example, if 3 customers have not paid in 6 months, you then have to decide if you have to keep them in accounts receivable or write them off. You are also expected to understand tax policies, the lifetime of the assets you own, and how inventories are increasing or decreasing in prices.
Just Use PayTech Business Accounting
If you are experienced in small business accounting in Phoenix, you should most certainly know each of these items. Since you may not be an accountant and don’t want to mess with figuring this stuff out, it is time to call the accounting experts at PayTech! We offer reliable and resourceful small business accounting services in the Phoenix area and will gladly help your business. You can find out about our pricing and packages or give us a call at (602) 900-8807!