Importance of Business Accounting Video

Question: "Why is a good understanding of accounting important for running your own business?" Maureen Costello Wholesale Distributor Topics covered in this video: Understanding business accounting, cash flow, taxes, loans Transcript: I think that if an entrepreneur doesn't have a good understanding of accounting there will be a very high probability of failure. Accounting is the way you keep track of how well your business is doing. It's how you keep track of your cash. If you run out of cash, even if your sales are growing and your profits on the books are high, you're out of business. You can go bankrupt even with a successful business. So the only way you're going to know is if you do really good accounting, do cash flow projections and really watch your cash. So that's number one. Secondly, you have pay taxes; you have to be in compliance with the tax laws. If you're not very good with accounting you're going to have problems with the IRS. They too can put you out of business. So you want to be sure you know what you're supposed to be doing from an accounting point of view. Also, you won't be able to get bank loans if you don't do a good job at accounting because you have to have financial statements that you can bring to a bank that are in the format that they are accustomed to, in order to gain their confidence to loan you money. So there are a number of reasons why being familiar with accounting and making sure you have very good accounting for your business are important to you.