Does anyone have any insight weather to use the accrual or cash method of accounting. I am a fiber artist who creates handbags and has inventory and supplies. Thanks.
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cant imagine why you would even consider accrual...much mor difficult.....unless you are are selling way higher numbers that i can imagaine, cash method is by far the way to go. (30 yrs bookkeeper/tax preparer)
Thanks for the great advice. I also keep my own books. I am self taught and question myself often. Taking a course is a great suggestion.
Karole Bowlds said:
Marilyn, I use both methods- and have accounting certification. Cash for the $$ part, and accrual for inventory. And a little tip- you will have more than one inventory.
1 for your supplies=raw materials
2 for WIP=Work in Progress
3 for finished goods=product ready for sale.
Most small businesses that need inventory, use a mix of both methods.
If you want to manage your own books, take a basic accounting class at your local high school- very helpful- especially if you are serious about your business. EVERY person who owns a business should know how to do the books- even if they hire an accountant to do so. That way YOU KNOW exactly what is going on with your $$. This is the first rule of accounting for a business owner. This way you can't be cheated, or fooled into making risky decisions. Accounting is NOT math- its a system. BTW I am a beader/jeweler, with inventories and supplies. And I keep my own books.
I am also a bit of a control freak! But at least if you understand how its done, you can't be taken for a ride. And you will also be more in tune with what you need to do to make your business grow. That's my advice for today!
Karole
Quickbooks is the best tool!
Marilyn,
I use both methods- and have accounting certification. Cash for the $$ part, and accrual for inventory.
And a little tip- you will have more than one inventory.
1 for your supplies=raw materials
2 for WIP=Work in Progress
3 for finished goods=product ready for sale.
Most small businesses that need inventory, use a mix of both methods.
If you want to manage your own books, take a basic accounting class at your local high school- very helpful- especially if you are serious about your business. EVERY person who owns a business should know how to do the books- even if they hire an accountant to do so. That way YOU KNOW exactly what is going on with your $$. This is the first rule of accounting for a business owner. This way you can't be cheated, or fooled into making risky decisions. Accounting is NOT math- its a system. BTW I am a beader/jeweler, with inventories and supplies. And I keep my own books.
I am also a bit of a control freak! But at least if you understand how its done, you can't be taken for a ride. And you will also be more in tune with what you need to do to make your business grow. That's my advice for today!
Karole
Quickbooks is the best tool!
The cash method will be the simplest to a non accountant. I sell jewelry and use the cash method. I have worked with both systems when I worked as a bookkeeper eons go and cash takes the least work in my opinion.
This isn't going to be a lot of help, Marilyn, but we always used the cash method of accounting -- because that is what our accountant said to do. Actually, he used that method :)
From the beginning we had an accountant. We were too nervous about making errors and having problems with tax payments. He set up our books and got us started.
Replies
cant imagine why you would even consider accrual...much mor difficult.....unless you are are selling way higher numbers that i can imagaine, cash method is by far the way to go. (30 yrs bookkeeper/tax preparer)
Karole Bowlds said:
I use both methods- and have accounting certification. Cash for the $$ part, and accrual for inventory.
And a little tip- you will have more than one inventory.
1 for your supplies=raw materials
2 for WIP=Work in Progress
3 for finished goods=product ready for sale.
Most small businesses that need inventory, use a mix of both methods.
If you want to manage your own books, take a basic accounting class at your local high school- very helpful- especially if you are serious about your business. EVERY person who owns a business should know how to do the books- even if they hire an accountant to do so. That way YOU KNOW exactly what is going on with your $$. This is the first rule of accounting for a business owner. This way you can't be cheated, or fooled into making risky decisions. Accounting is NOT math- its a system. BTW I am a beader/jeweler, with inventories and supplies. And I keep my own books.
I am also a bit of a control freak! But at least if you understand how its done, you can't be taken for a ride. And you will also be more in tune with what you need to do to make your business grow. That's my advice for today!
Karole
Quickbooks is the best tool!
From the beginning we had an accountant. We were too nervous about making errors and having problems with tax payments. He set up our books and got us started.