Why you need to know your numbers 2
Mar 18, 2016
Do you want to achieve your goal and dream of being self-employed? Do you want to be successful in business and know that your skill and expertise is the driving force behind your success? We bet you do and that’s really great! You need that enthusiasm to keep you motivated and inspired. No one ever said building an empire is easy (no matter how small) so you had better be prepared.
In this guide, we will help you recognise common mistakes and misconceptions made in business accounting. We will also help you know the ins and outs of your business numbers in order to make them work for you.
Many people place too much emphasis on their year-end financial statements. This is a big mistake. In reality, your financial statements are good for only two things.
1. To apply for a loan from the bank; no bank will give you any credit without a full set of financial statements.
2. To calculate your end-of-year tax requirements and file them with Inland Revenue, to satisfy your taxation obligations and requirements.
In reality, financial statements do not help you understand how your business is doing or why your business has achieved the results that it has. More importantly, the information in them could be six to nine months out of date. In some scenarios, you could be trading for up to 18 months before you realise that the business isn’t achieving the results you thought it was.
You could say, “That’s what we pay our accountant for”, but nothing beats being number-savvy so that you can look into your business at any point in time and make timely, well informed decisions about the direction of the business.
A partnership with your accountant is important and allows you to draw on their expertise, but basic number skills will help you to understand the changing dynamics of your business and respond and react accordingly. Can you afford to wait until your accountant ‘catches’ your mistake when they prepare year end accounts? By that time, you may already be in too deep. Time is one of the most precious commodities.
As a business owner, you need to have a basic understanding of everything affecting your business so that you can take charge. When business owners know their numbers, they are able to run their businesses more effectively, make more money and have more fun doing it.
Your farm may be the most important asset that you have. The vast majority of farm owners in New Zealand are committed to the long term, and have a strong desire to see the farm pass on to the next generation. In order to achieve this goal, you need to look after your business, understand it, and develop it, so it can support you and the generations that follow. The satisfaction of achieving this will give certainty and peace of mind.
In this guide, we will help you recognise common mistakes and misconceptions made in business accounting. We will also help you know the ins and outs of your business numbers in order to make them work for you.
Many people place too much emphasis on their year-end financial statements. This is a big mistake. In reality, your financial statements are good for only two things.
1. To apply for a loan from the bank; no bank will give you any credit without a full set of financial statements.
2. To calculate your end-of-year tax requirements and file them with Inland Revenue, to satisfy your taxation obligations and requirements.
In reality, financial statements do not help you understand how your business is doing or why your business has achieved the results that it has. More importantly, the information in them could be six to nine months out of date. In some scenarios, you could be trading for up to 18 months before you realise that the business isn’t achieving the results you thought it was.
You could say, “That’s what we pay our accountant for”, but nothing beats being number-savvy so that you can look into your business at any point in time and make timely, well informed decisions about the direction of the business.
A partnership with your accountant is important and allows you to draw on their expertise, but basic number skills will help you to understand the changing dynamics of your business and respond and react accordingly. Can you afford to wait until your accountant ‘catches’ your mistake when they prepare year end accounts? By that time, you may already be in too deep. Time is one of the most precious commodities.
As a business owner, you need to have a basic understanding of everything affecting your business so that you can take charge. When business owners know their numbers, they are able to run their businesses more effectively, make more money and have more fun doing it.
Your farm may be the most important asset that you have. The vast majority of farm owners in New Zealand are committed to the long term, and have a strong desire to see the farm pass on to the next generation. In order to achieve this goal, you need to look after your business, understand it, and develop it, so it can support you and the generations that follow. The satisfaction of achieving this will give certainty and peace of mind.