I'm just starting my business. What do I need to know about accounting?
There are two basic types of accounting: cash accounting and accrual. Cash accounting tracks when money is physically received or paid out. Accrual accounting is more precise and is tracked when the expense is incurred or paid out. If you get an accountant, he or she will go over different types of bookkeeping with you based on how you want to manage your business. Cash accounting is the easier of the two. It can be deceiving though because it does not give you a good picture of your cash flow. Accrual accounting will give you better numbers for your business at specific times over the course of the year. If you are a business that thrives through different seasons, accrual accounting is the way to go.