What’s accounting?

I recently read an interesting story about a real situation that happened to someone who didn’t have any clue about accounting and the importance of keeping everything compliant, straight and accurate. I don’t even want to recall all that was left undone when it comes to reporting. It’s obvious that he’s right now in a total mess, ruined lots of relationships and his name and is possibly facing huge fines, personal bankruptcy or even some jail time. 

Okay, it wasn’t meant to scare you off, but merely stress the importance accounting has to your business. Don’t get me wrong, having your “own thing” going is absolutely wonderful and rewarding, but you must never forget that there’s also some level of responsibility which comes with it and even still so when you’re just on your own in your company. Even so there’s still something to keep it all going and operating according to regulation and common business practices (i.e. paying bills on time or paying them at all).

I’ve always been saying in whichever situation in life that with having control over things and especially finances you also get responsibility. Funnily enough people seem to forget it when there’s a possibility of doing “your own thing” or “being in charge of things”. It’s like you’re getting power over things and you completely overlook this responsibility side of it all.

What accounting in essence is, is keeping track and record of all your finances, your resources that make the business – assets and liabilities, revenues and expenses. It’s all what a business owns and generates. Without any accurate records of all of this the business is in a mess pretty soon.