Do Entrepreneurs Need to Know Anything About Accounting?
Entrepreneurs can get by without knowing anything about accounting if they have a good business partner who they know and trust to manage that side of the business.
What About Do It Yourself (DIY) Accounting for Entrepreneurs?
If the entrepreneur wants to do it themselves, then the most important thing is to manage the bank account. They need to understand where the money is coming from and where it is going to. Is the money coming in from customers, investors, or lenders? Is the money going out to employees, contractors, merchandise, or business expenses? Is there more money going in than coming out or vice versa?
How to Track If The Accounting Is Correct
The entrepreneur needs to make sure the recording of where the money is coming from (is the money actually coming from customers or investors?) and going to (is the money actually going to employees or contractors?) is correct, so a decent chart of accounts needs to be set up and followed consistently.
How to Know if the Bank Balance is Correct
The entrepreneur needs to make sure the amount of money in the bank account is correct, so a monthly bank reconciliation needs to be completed, comparing the balance in the bank account with the balance in the accounting records.
