small business management software

A practical and well thought through business plan helps you map the way ahead, manage your business more effectively and provides a blueprint for a coherent and useful chart of accounts.

The exercise of planning will reveal to what you should track and measure in your Profit and Loss accounts. A word of advice - using small business accounting software is an easier option than spreadsheets or day books to record financial transactions in your chart of accounts.

Forecasting income, fixed and variable expenses will clarify what should be tracked and measured.

Payroll is the most obvious example of a Fixed Expense. These payments have to be made regardless of sales income.

Diligently tracking fixed expenses is critical to the smooth operation of your business as misjudging the effect of ongoing commitments can cause serious problems in a business. This is where small business accounting software can really help.

There is a direct correlation between variable expenses and revenue.

Tax repayment is a key variable expense that should be accurately tracked. This is often overlooked by businesses. Misjudging this can lead to financial suprises and pressure/distractions you just don’t need from the authorities when you are focused on managing your business.

The Income, Fixed Expenses and Variable Expenses are all reported in the Profit and Loss. The P&L activity directly affects the Balance sheet.

So my advice is you start your financial planning in the Profit and Loss and it should be apparent what Balance sheet Accounts you’ll need and what the expected financial positions or balances will be when.