So I’ve set up my own business, but now there’s something called “accounting”?

Setting up your business is your first thing obviously – you’ve got your business idea and now you need a company to start putting this idea into reality in. Clients, suppliers, products etc., all of it needs some planning, communication, actions and keeping record of. It’s “keeping record” that amongst other things includes accounting.

Besides having order in contracts, client listings etc. you ought to keep a tight record of all your financial transactions – sales, purchases etc. Accounting is what helps you realize how much you spend on certain areas of business – marketing, rent, utilities and so on – but it also shows how much you’re earning from sales. It’s what tells you your assets, what you owe for purchases and how much cash you should have. Accounting will also help you realize if you’re making profits or losses and if you’re in cash inflow or outflow. In short it tells you how your business is doing. Something you should realize is that business is not just selling and buying, but also keeping it viable, i.e. making profits to sustain the activity and satisfy your as the owner’s needs.

In earlier ages with one-man shops you’d buy your goods, sell them on your own property, pay for the utilities, goods and what else you needed to keep yourself alive, like food, clothes etc. and whatever was left was the cash you could spend on either enhancing the property, buying something extravagant or go on a holiday. That’s how businesses were run like ages ago but even then there was little bit of accounting done. How else would you be able to plan for some bigger expenses or purchases? You also needed to keep record of all your debt balances and possibly also receivables from clients who always didn’t pay right at the spot.

Even if it’s this little, you’re still doing accounting. And it’s very doubtful you don’t see it being useful. I know it may sound confusing and difficult, but nonetheless it’s not a reason to not do it.