U.S. Small Business Administration                          FM-10







                 RECORDKEEPING IN SMALL BUSINESS







                   Financial Management Series



_________________________________________________________________



Copyright, 1991, Donald A. Cordano.  All rights reserved.  No

part may be reproduced, transmitted or transcribed without the

permission of the author.  SBA retains an irrevocable, worldwide,

nonexclusive, royalty-free, unlimited license to use this

copyrighted material.



While we consider the contents of this publication to be of

general merit, its sponsorship by the U.S. Small Business

Administration does not constitute an endorsement of the views

and opinions of the authors or the products and services of the

companies with which they are affiliated.



All SBA programs and services are extended to the public on a

nondiscriminatory basis.

_________________________________________________________________



                        TABLE OF CONTENTS



INTRODUCTION   1



THE NEED FOR GOOD RECORDS

     Monitor Inventory  1

     Control Expenses   1

     Fulfill Payroll Requirements 1

     Determine Profit Margin 1

     Improve Cash Flow 2

     Use Supplier Discounts 2

     Measure Performance 2



REQUIREMENTS OF A GOOD SYSTEM

     Commercial Record-Keeping Systems 2

     Computerized Record Keeping 2



METHODS OF ACCOUNTING

     Cash Basis Method      3

     Accrual Basis Method  3



THE ACCOUNTING CYCLE

     Journals  3

     General Ledgers  3

     Trial Balance  4

     Financial Statements  4

     Percentages  4



HOW TO AN0ALYZE YOUR RECORDS

     Analyzing Payroll Expenses      7

     Ratios  7



OTHER IMPORTANT RECORDS

     Accounts Receivable 8

     Payroll and Taxes 8

     Petty Cash  8

     Insurance  9

     Business Equipment  9



ACCOUNTING SERVICES

     Selecting the Accounting Serivce 9

     Advice and Assistance   10

     Cash Flow Requirements  10

     Business Borrowing  10

     Legal Structure  10

     Tax Considerations 10



APPENDIXES

     A. Financial Status Checklist  11

     B. Information Resources 21

_________________________________________________________________



INTRODUCTION



An appropriate record-keeping system can determine the survival

or failure of a new business. For those already in business, good

record-keeping systems can increase the chances of staying in

business and the opportunity to earn larger profits. Complete

records will keep you in touch with your business's operations

and obligations and help you see problems before they occur.



This publication explains the characteristics of and procedure

for establishing a good record-keeping system.

_________________________________________________________________



THE NEED FOR GOOD RECORDS



Accounting records furnish substantial information about your

volume of business, such as how present and prior volumes

compare, the amount of cash versus credit sales and the level and

status of accounts receivable. In addition, good accounting

records help to accomplish the following tasks.



Monitor Inventory



While a large inventory allows goods to be delivered when they

are ordered, too large an inventory represents an excess

investment. If your inventory does not turn over quickly, your

business may lose profits due to obsolescence, deterioration or

excess investment.



Any items removed from inventory for personal use should be set

aside in a special account for two reasons: first, they need to

be recognized separately for tax purposes and, second, including

these items in business gross profit calculations can be

misleading.



Control Expenses



Accounting records detail the amounts owed to suppliers and other

creditors so that you can plan the availability of cash to meet

your obligations. Such records also provide information regarding

expenditures and allow you to establish controls over them. At

all times, you must be aware of your individual expense

requirements and how they relate to the overall picture.



Fulfill Payroll Requirements



Payroll is one of the largest expenses in a small business.



Adequate payroll records should meet the requirements of the



     *     Internal Revenue Service.



     *     State department of revenue.



     *     Local department of revenue.



     *     Workers' compensation laws.



     *     Wage and hour laws.



     *     Social security requirements.



     *     Unemployment insurance requirements.



For each of these categories you are required to provide annual

reports and summaries. In addition, you must provide employees

with the W-2 forms needed to file federal and other income tax

returns. In order to provide this detailed information, it is

essential for you to maintain good accounting records.



Determine Profit Margin



Good accounting records will indicate a business's level of

profit, and provide specific information on the profitability of

certain departments or lines of goods within your business. Such

analysis is important to avoid continuing product lines far

beyond their profitability. In most cases, you can avoid losses

if you maintain current records and analyze the information from

your records on an ongoing basis.



Improve Cash Flow



Good accounting records provide detailed reports of cash

availability, both on hand and in the bank, and of cash shortages

or the diversion of cash. Since cash is your most liquid asset,

you must carefully account for it.



Use Supplier Discounts



A cash budget will provide the business owner with a projection

of the availability of cash that may be used to pay invoices as

they become due. Discounts from suppliers for prompt payment can

amount to substantial savings. A 2 percent discount is common if

you pay the bill in full within 10 days; if not, full payment is

due within 30 days. In business, this is commonly referred to as

"2/10, n/30" where n = the net sum due. It means you pay 2

percent less if you pay within 10 days or you pay full price

within 30 days. Take into account that this discount is

cumulative. If you make timely payments for each month of the

year you will gain a 24 percent benefit (2 percent 12 months).



Measure Performance



Finally, good business records help you measure your business's

performance by comparing your actual results with the figures in

your budget and those of other similar businesses.

_________________________________________________________________



REQUIREMENTS OF A GOOD SYSTEM



The following criteria are essential to a good record-keeping

system:



     *     Simplicity



     *     Accuracy



     *     Timeliness



     *     Consistency



     *     Understandability



     *     Reliability and completeness



There are several copyrighted accounting systems that can be

purchased and adapted to the individual business, or you may find

it is better to use a system specifically designed for your

business and one that meets the above-mentioned criteria.



Commercial Record-Keeping Systems



Record-keeping systems are currently available from various

sources in the marketplace: stationery stores, publishers and

business advisory services. These systems either are specifically

designed for a certain type of business or are general enough to

be used by many different types of businesses. Systems are

available for cash basis recording, accrual basis recording and

for both single and double entry.



Computerized Record Keeping



Consider using a computer for your business operations. Compare

different software systems and make sure that the system you

choose provides accurate and timely information and offers more

than adequate presentation of accounting information for small

businesses.



Low-cost computer programs are available that can handle many of

the book entries that are necessary in a system that is

maintained by hand. Appropriate hardware and a good general

ledger software program can offer you substantial assistance in

recording business transactions and summarizing the information

into appropriate accounting presentations.



Currently available software allows you to enter transactions

individually; these transactions are posted directly to the

general ledger. A printout at the end of a given period shows the

individual account activity, and also includes a balance and

total of the accounts and provides a trial balance presentation.

If the software is designed properly, it will provide

appropriately prepared financial statements (balance sheet,

income statements).

_________________________________________________________________



METHODS OF ACCOUNTING



There are two basic methods of accounting: cash basis and accrual

basis. The method you choose will depend on your type of

business. Cash basis is the simpler method. It is mainly used by

service businesses that do not maintain inventory or startup

businesses that do not offer credit. The accrual method is used

by businesses that provide for credit sales or maintain an

inventory.



Cash Basis Method



In cash basis accounting, you record sales when cash is received

and expenses when they are actually paid. Using the cash basis

method is like maintaining a checkbook. Under this method,

accounts receivable are not recorded as sales until they are

collected. Accounts payable are not recorded as expenses until

the account is paid. Bad debt, accruals and deferrals are not

appropriately recorded under cash basis because they are examples

of outstanding credit (business notes). The cash basis method is

not appropriate for businesses that extend credit.



Accrual Basis Method



In accrual basis accounting, you report income or expenses as

they are earned or incurred rather than when they are collected

or paid. Record credit sales as accounts receivable that have not

yet been collected.



The accrual basis also provides a method for recording

expenditures paid in a single installment but covering more than

one period. For example, interest may be paid semiannually or

annually, but it is recorded on a monthly basis.



The accrual method satisfies the matching concept, i.e., matching

income with related expenditures. Consequently, it can provide a

clear and accurate view of business operations for a given

period.

_________________________________________________________________



THE ACCOUNTING CYCLE



The accounting cycle can be described as follows:



     1.  A business transaction occurs, giving rise to an

         original document that is recorded in a book of original

         entries called a journal.



     2.  The totals from the journal are summarized and reported

         in a book of accounts, known as a general ledger.



     3.  The general ledger contains the individual accounts

         maintained by the business.



     4.  The individual accounts are listed in the form of debits

         and credits, known as the trial balance of the general

         ledger.



     5.  From this trial balance, after making certain

         adjustments, you prepare the business's financial

         statements.



Journals



You derive the information for each journal entry from original

source documents, such as, sales slips, cash register tapes,

check stubs, purchase invoices and other items that record your

business transactions. You may need to create subsidiary journals

for specific, frequently occurring types of transactions, such as

sales and expenses.



General Ledgers



The summary and totals from all journals are entered into the

general ledger. A general ledger is a summary book that records

transactions and balances of individual accounts, and is

organized into five classes of individual accounts, as follows:



     1.   Assets -- A record of all items that the business

          owns.



     2.   Liabilities -- A record of all debts the business owes.



     3.   Capital -- A record of all ownership or equity.



     4.   Sales -- A record of all income earned for a specific

          period.



     5.   Expenses -- A record of all expenditures incurred

          during a given period.



When the trial balance is prepared, these classifications are

easily recognized.



Trial Balance



At the end of the fiscal year or accounting period, the

individual accounts in the general ledger are totaled and closed.

The balances of the individual accounts are summarized in the

financial statements.



Financial Statements



The main types of financial statements are the balance sheet and

the income statement, also known as the profit and loss

statement. The balance sheet is a report of a business's

financial condition (assets, liabilities and capital) at a

specific moment in time (see Example 1) and the income statement

is a summary of profit and loss for a specific period of time,

generally a month, quarter or year (see Example 2). Other

statements may be prepared. For example, a cash flow statement

identifies the sources and applications of cash. Statements may

also be prepared to indicate manufacturing expenses or other

special areas that are of interest to you.



Percentages



Percentages are used in financial statements to show the part of

each sales dollar used by the various expenses. Percentages are

especially helpful for comparing current year financial

statements with those of prior years to determine business

trends. Percentages are also helpful for comparing your figures

with those of other firms in the same line of business (see

Example 3).

     _______________________________________________________



                          Example 1

                        ABC SALES CO.

                        BALANCE SHEET 

                      December 31, 199_

 

  Assets 

 

  Current assets 

    Cash                           $23,590 

    Notes receivable                         10,000 

    Accounts receivable                      20,880 

    Merchandise receivable                   62,150 

    Store supplies                              960 

    Office supplies                             480 

    Prepaid insurance                         1,650 

 

       Total Current Assets                         $119,710

 

  Plant assets 

    Land                                    $20,000 

    Building                      $140,000 

     Less accumulated depreciation           33,900  106,100

    Office equipment                15,570 

     Less accumulated depreciation   8,720    6,850 

    Store equipment                 27,100 

     Less accumulated depreciation  15,700   11,400 

        Total plant assets                  144,350 

 

          Total assets                              $264,060

 

 

  Liabilities 

 

  Current liabilities 



    Accounts Payable                        $22,420 

    Mortgage note payable 

      (current portion)                       5,000 

    Salaries payable                          1,152 



       Total current liabilities                     $28,572

 

  Long-term liabilities 



    Mortgage note payable                    20,000 

 

         Total liabilities                           $48,572

 

  Stockholders' Equity 

 

    Capital Stock                          $100,000 

    Retained earnings                       115,488 



       Total stockholders' equity                   $215,488



        Total liabilities and 

          stockholders' equity                      $264,060

     _______________________________________________________



                         Example 2

                       ABC SALES CO.

                     INCOME STATEMENT 

                    December 31, 199_



  Revenue from Sales



    Sales                                           $732,163

      Less: Sales returns 

       and allowances              $6,140

      Less: Sales discount          5,822    11,962

      Net sales                                      720,201



    Cost of merchandise

      Merchandise inventory 

       January 1 purchases        530,280

        Less purchases discount     2,525

      Net purchases                         527,755

    Merchandise available 

     for sale                     587,455

      Less merchandise inventory 

        December 31                62,150

    Cost of merchandise sold                         525,305



  Gross Profit                                       194,896



  Operating Expenses



  Selling expenses

    Sales salaries                $60,044

    Advertising                    10,460

    Depreciation-store equipment    3,100

    Insurance-selling               2,080

    Store supplies                  2,010

    Miscellaneous (selling)           630

       Total selling expenses                78,324



  General expenses

    Office salaries                21,032

    Heating and lighting            8,100

    Taxes                           6,810

    Depreciation-building           4,500

    Depreciation-office equipment   1,490

    Insurance-general                 830

    Office supplies                   610

    Miscellaneous                     760

       Total general expenses                44,132



       Total operating expenses                      122,456



       Net income from operations                     72,440

       Other Income-interest income           3,600

       Other expense-interest expense         2,440    1,160



  Net Income                                          73,600

     _______________________________________________________



                Example 3--Appliance Repair Company

                Income Statement Showing Expenses as 

                       Percentage of Sales



                Total       Parts            Service

               Amount Percent  Amount Percent Amount Percent

 Gross Sales  $70,000 100.00  $25,000 100.00  $45,000 100.00



 Cost of sales

  Opening 

   inventory   13,000          13,000   

  Purchases    25,000          25,000   

  Total        38,000          38,000   

  Ending 

   inventory   14,000          14,000   

  Total cost

    of sales   24,000   34.29  24,000  96.00  

 Gross Profit  46,000   65.71   1,000   4.00  

 Operating 

   expenses      

  Payroll      26,000   37.14                  26,000  57.78

  Rent          3,000    4.29   1,500   6.00    1,500   3.33

  Payroll taxes 1,500    2.14                   1,500   3.33

  Interest        600     .86     300   1.20      300    .67

  Depreciation  1,400    2.00                   1,400   3.11

  Truck expense 5,500    7.86                   5,500  12.22

  Telephone     2,400    3.43   1,200   4.80    1,200   2.67

  Insurance     1,000    1.43     400   1.60      600   1.33

  Miscellaneous 1,000    1.43     500   2.00      500   1.11

      

 Total Expenses 42,400  60.58   3,900  15.60   38,500  85.55

 

 Net Profit (Loss)

  (Exclusive of 

   owner's salary)3,600  5.14  (2,900)(11.60)   6,500  14.44

_________________________________________________________________



HOW TO ANALYZE YOUR RECORDS



To chart the progress of your business, you should become

familiar with various forms of financial statements analysis and

measurement.



Financial statements indicate which items need more attention.

For example, profits may be too low or rent unnecessarily high.

Perhaps there is a way to use the business vehicles more

efficiently, to increase inventory turnover or to reduce long

distance telephone bills.



In analyzing financial statements, carefully examine all items

that do not seem realistic. Answer the following questions:



     *    Why are certain expenses at a particular level?



     *    Are there any ways to reduce or avoid certain expenses?



     *    Should you incur all of your expenses?



     *    Does the level of profit justify your investment, time

          and effort?



Financially significant items should be analyzed regularly. For

example, examine payroll as a percentage of total administrative

expenses. Keep in mind that, if your business is a

proprietorship, your salary is not a payroll expense; however, if

your business is a corporation, your salary should be a payroll

expense.



Analyzing Payroll Expenses



In justifying payroll and other expenses, answer the following

questions:



     *    Are accurate records maintained for time spent on

          various jobs and functions?



     *    Is the eight-hour day of each employee accounted for

          appropriately?



     *    When employees are paid overtime, is the additional

          expense reflected in charges to the customer?



     *    Is the level of payroll expense appropriate for your

          type of business?



     *    Are you billing on a guaranteed price basis or on an

          hourly basis?



     *    When using guaranteed price basis for billing, does

          actual time spent exceed time estimated for the job?



     *    Do employees work with a minimum of wasted effort and

          time?



     *    Are you operating at maximum efficiency? What

          strategies can be implemented to maximize efficiency?



Ratios



Accountants use various ratios to evaluate financial statements,

such as ratios that assess liquidity, solvency and profitability.



Liquidity



These ratios indicate the availability of cash and the firm's

ability to pay liabilities.



Current ratio:                    Current assets divided by

                                  Current liabilities



Acid test                         Cash, cash equivalents and

(liquidity ratio):                Receivables divided by

                                  Current liabilities

 

Day's sales                       Accounts receivable divided by

in receivables:                   Credit sales divided by 360

 

Inventory turnover:               Cost of sales divided by

                                  Average inventory

 

Capital and Long-term Solvency



These ratios indicate the firm's ability to meet debts when due.



Equity/debt ratio:                Total equity divided by

                                  Total debt

 

Total equity to                   Total equity divided by

fixed assets:                     Net fixed assets

 

Profitability



These ratios indicate your firm's performance.

 

Gross profit margin:              Gross profit divided by

                                  Sales

 

Net income to sales:              Net income divided by

                                  Sales



Operating income to sales:        Income before income taxes

                                  divided by Total assets

 

Return on total assets:           Net income and interest

                                  expenses divided by Total

                                  assets



Return on total assets:           Net income divided by

                                  Total equity

_________________________________________________________________



OTHER IMPORTANT RECORDS



In addition to accounting records, you will need to keep separate

records for accounts receivable, payroll and taxes, petty cash,

insurance, business equipment and perhaps other items.



Accounts Receivable



A good record-keeping system should provide you with a detailed

report of accounts receivable, including current information on

customers and a running balance of their accounts. To maintain a

good accounts receivable system, record credit charges on a

regular basis. It is essential that you follow up on all late

paying and delinquent customers.



Accounts receivable should be aged at the end of each month. This

means organizing the accounts into those that are current; 30-,

60-, and 90-days old and older. This arrangement helps you to

take appropriate, timely actions.



One example of a timely action is to transfer delinquent accounts

to a notes receivable account. Notes receivable are loans the

business makes to others, either inside or outside the business.

Each note receivable should contain specific terms of credit and

interest and should be signed by the customer. An additional

timely action to decrease the number of bad accounts and avoid

the effort of collecting payments from slow-paying customers is

to issue a formal complaint with your local credit bureau.



Payroll and Taxes



Current Internal Revenue Service (IRS) regulations require that

you withhold federal income tax and social security (FICA) from

each employee. You must remit the amount for taxes to the IRS on

a quarterly, monthly or more frequent basis. A detailed reporting

system for payroll will help you make timely tax payments.



Gather specific information about each employee on individual

employee record cards. All employees should fill out federal Form

W-4, which indicates their filing status and the number of

exemptions they claim. Use this information to compute the

federal withholding and social security (FICA) deductions for

each payroll check.



Prepare Employees Quarterly Federal Tax Return (Form 941) by

totaling each employee's withholding for federal taxes and social

security. File Form 941 with the IRS.



Each payroll period, total the accumulated withholdings of both

federal taxes and social security for all employees. If this

total exceeds $500 for any month, you must deposit this amount by

the 15th day of the following month in a depository bank (an

authorized financial institution or a federal reserve bank).

Generally, when the total exceeds $3,000, you must deposit this

amount within three business days. Any overpayment in taxes is

paid back to you quarterly.



At the year's end, you are required to prepare not only the

information normally required for that quarter, but also

summaries of each employee's total earnings and withholdings for

the year (Form W-2). Provide this form to each employee and the

IRS.



A Word of Caution



It is very easy to fall behind in making tax payments. If you

find yourself short of cash, do not be tempted to delay payment

of taxes. The IRS will not bill your business for taxes due nor

will it notify you of late payments. Delayed payments can easily

add up to a large sum; the debt may impede the growth of your

business and may even force you to close your business, to say

nothing of the federal penalties incurred for late payments.



With a good record-keeping system, you can simplify the process

of filing taxes to the point where the information needed to

complete the forms is automatically generated. Setting up such a

system is a rather technical task and you may need to seek

guidance.



Petty Cash



Sometimes a petty cash fund is needed to purchase small items

required on a day-to-day basis. If this is necessary, draw a

check to petty cash for a nominal amount.



Problems often arise when cash is easily available; therefore, if

possible, avoid a petty cash fund. However, very often the

convenience of having a small amount of cash available will

facilitate the smooth operation of your business. Be sure to

balance this fund monthly, based on the cash balance plus

receipts for all expenditures.



Insurance



Most businesses have several types of insurance. For each policy,

you should have the following information:



     *     Clear statement of the type of coverage.



     *     Names of individuals covered.



     *     Effective dates and expiration date.



     *     Annual premium.



Review your insurance policies on a regular basis. In addition,

annually consult an insurance specialist, who will review the

total insurance package to determine what coverage is appropriate

and ensure that premiums remain in line with prior quotations.



Business Equipment



Keep an accurate list of permanent business equipment used on

both a regular and stand-by basis. The list should describe the

equipment and provide serial numbers, date of purchase and

original cost. Keep the list available for insurance or other

purposes. You will also need this information to prepare accurate

depreciation schedules.

_________________________________________________________________



ACCOUNTING SERVICES



You have several choices in who should maintain your accounting

system. You can



     *    Maintain the books yourself.



     *    Hire a bookkeeper on a full-time or part-time basis.



     *    Hire the accountant who set up your books.



     *    Set up a hybrid system in which you maintain the

          day-to-day reports, while an accountant does the

          period-end record preparation, summaries and

          renconiliations and the returns for sales tax, excise

          tax and payroll taxes.



In making the choice, you must decide whether you have the

ability and time to set up and maintain good records or if you

should engage an outside accounting service. It is usually

suggested that you hire an accountant to do the final year-end

preparations and to advise you. No matter what you choose, you

should remain familiar with your books and participate in the

record-keeping process. This will maximize the services provided

by the accountant and allow you to keep track of your business.



Selecting the Accounting Service



If you decide to hire an outside service, find an accounting firm

that will work closely with your business and provide you with

the information necessary to develop a successful operation.

Interview several accounting professionals and compare their

level of accounting knowledge, computer literacy, knowledge of

and experience with small business accounting and any specialized

knowledge required in your business.



There are many types of professionals you may consider, such as a

certified public accountant, an enrolled agent or an accredited

accountant.



     *    Certified Public Accountant (CPA) -- A person who has

          passed the American Institute of CPAs' national

          examination, which tests an individual's ability in   

          accounting, auditing, law and related areas.



     *    Enrolled Agent (EA) -- An individual who has passed a

          two-day exam prepared by the IRS, covering many areas

          of federal taxation. This person is generally

          considered a tax specialist.



     *    Accredited Accountant -- An individual who has passed a

          rigorous examination prepared by the Accreditation

          Council of Accountancy and Taxation, a national

          accounting accreditation board affiliated with the

          National Society of Public Accountants and the College

          for Financial Planning in Denver, Colorado. Accredited

          accountants specialize in small business accounting.



Other accountants in public practice perform various levels of

accounting and write-up services.



When selecting an accountant, the cost of the accountant's fees

must be weighed against the benefits received. Frequently, the

accountant's professional advice can increase profits to more

than cover the expense. Monthly services by an accounting firm

will provide you with complete and timely information and also

will allow the accountant to develop knowledge of your business

and be in a more comfortable position to render professional

advice as the business grows.



Advice and Assistance



In addition to bookkeeping, an accountant can advise you on

financial management. He or she can assist with cash flow

requirements and budget forecasts, business borrowing, choosing a

legal structure for your business and preparation and advice on

tax matters.



Cash Flow Requirements



An accountant can help you work out the amount of cash needed to

operate the business during a certain period for example, a

three-month, six-month or one-year projection. The accountant

considers how much cash you will need to carry your accounts

receivable, to increase inventory, to cover current invoices, to

acquire needed equipment and to retire outstanding debts.

Additionally, the accountant can determine how much cash will

come from collection of accounts receivable and how much will

have to be borrowed or provided from other sources.



In determining cash requirements, the accountant may notice and

call attention to danger spots, such as accounts that are in

arrears or delinquent areas or areas of excess expenditure.



Business Borrowing



An accountant can assist you in compiling the information

necessary to secure a loan: the assets the business will offer

for collateral, the present debt obligations, a summary of how

the money will be used and repayment schedules. Such data show

the lender the financial condition of the business and your

ability to repay the loan. Remember, lenders have two very

definite requirements: (1) that the business have adequate

collateral to secure the loan and (2) that the business will be

able to repay the loan. An accountant can advise on whether you

need a short- or long-term loan. In addition, your accountant may

introduce you to a banker who knows and respects his or her

financial judgment.



Legal Structure



It is wise to discuss the type of business organization that best

fits your needs with an accountant and an attorney. They can

point out the advantages and disadvantages of the various forms

of business organization, such as a



     *    Proprietorship -- An extension of individual ownership.



     *    Partnership -- Multiple proprietors.



     *    Corporation -- A completely separate legal entity.



In addition, they can advise you on immediate plans regarding

management, financing, long-range plans to bring others into the

business and estate planning, all of which affect the type of

business you choose.



Tax Considerations



This is an area in which an accountant can provide much advice

and assistance. Your accountant can suggest methods to record and

document the various types of information necessary for taxes.

_________________________________________________________________



APPENDIX A: FINANCIAL STATUS CHECKLIST



What You Should Know



Daily



     1.   The balance of cash on hand.



     2.   The bank balance.



     3.   Daily summaries of sales and cash receipts.



     4.   Any errors or problems that have occurred in

          collections.



     5.   A record of monies paid out, both by cash and by check.





Weekly



     1.   Accounts receivable (particularly those accounts that

          appear to be slow paying).



     2.   Accounts payable (be aware of the discount period

          mentioned above).



     3.   Payroll (be aware of the accumulation of hours and the

          development of the payroll liability).



     4.   Taxes (be aware of any tax items that are due and

          reports that might be required by government agencies).





Monthly



     1.   If you engage an outside accounting service, provide

          records of receipts, disbursements, bank accounts and

          journals to the accounting firm. This will allow the

          firm to maintain good records and present them to you

          for review, consideration and support in decision

          making.



     2.   Make sure that income statements are available on a

          monthly basis, and certainly within 15 days of the

          close of the month.



     3.   Review a balance sheet that indicates the balance of

          business assets and the total current liability.



     4.   Reconcile your bank account each month so that any

          variations are recognized and necessary adjustments

          made.



     5.   Balance the petty cash account on a monthly basis. If

          you allow this account to extend for a longer period,

          it may create substantial problems.



     6.   Review federal tax requirements and make deposits.



     7.   Review and age accounts receivable so that slow and bad

          accounts are recognized and handled.

_________________________________________________________________



APPENDIX B: INFORMATION RESOURCES



U.S. Small Business Administration (SBA)



The SBA offers an extensive selection of information on most

business management topics, from how to start a business to

exporting your products.



SBA has offices throughout the country. Consult the U.S. 

Government section in your telephone directory for the office

nearest you. SBA offers a number of programs and services,

including training and educational programs, counseling services,

financial programs and contract assistance. Ask about



     *     SCORE: Counselors to Americas Small Business, a 

           national organization sponsored by SBA of over 11,000

           volunteer business executives who provide free

           counseling, workshops and seminars to prospective and

           existing small business people.  Free online counseling

           and training at www.score.org. 



     *     Small Business Development Centers (SBDCs), sponsored

           by the SBA in partnership with state governments, the

           educational community and the private sector. They

           provide assistance, counseling and training to 

           prospective and existing business people.



     *     Womens Business Centers (WBCs), sponsored by the SBA  

           in partnership with local non-government organizations

           across the nation. Centers are geared specifically to 

           provide training for women in finance, management,

           marketing, procurement and the Internet.



For more information about SBA business development programs and

services call the SBA Small Business Answer Desk at 1-800-U-ASK-

SBA (827-5722) or visit our website, www.sba.gov. 



Other U.S. Government Resources



Many publications on business management and other related topics

are available from the Government Printing Office (GPO). GPO

bookstores are located in 24 major cities and are listed in the

Yellow Pages under the bookstore heading. Find a Catalog of

Government Publications at http://catalog.gpo.gov/F 



Many federal agencies offer Websites and publications of interest 

to small businesses. There is a nominal fee for some, but most 

are free. Below is a selected list of government agencies that 

provide publications and other services targeted to small 

businesses. To get their publications, contact the regional 

offices listed in the telephone directory or write to the 

addresses below:



Federal Citizen Information Center (FCIC)

Http://www.pueblo.gsa.gov 

1-800-333-4636

The CIO offers a consumer information catalog of federal

publications.



Consumer Product Safety Commission (CPSC)

Publications Request

Washington, DC 20207

http://www.cpsc.gov/cpscpub/pubs/pub_idx.html 

The CPSC offers guidelines for product safety requirements.



U.S. Department of Agriculture (USDA)

12th Street and Independence Avenue, SW

Washington, DC 20250

http://www.usda.gov 

The USDA offers publications on selling to the USDA. Publications

and programs on entrepreneurship are also available through 

county extension offices nationwide.



U.S. Department of Commerce (DOC)

Office of Business Liaison

14th Street and Constitution Avenue, NW

Washington, DC 20230

http://www.osec.doc.gov/obl/ 

DOC's Business Liaison Center provides listings of business

opportunities available in the federal government. This service

also will refer businesses to different programs and services in

the DOC and other federal agencies.



U.S. Department of Health and Human Services (HHS)

Substance Abuse and Mental Health Services Administration

1 Choke Cherry Road

Rockville, MD 20857

http://www.workplace.samhsa.gov 

Helpline: 1-800-workplace. Provides information on Employee

Assistance Programs Drug, Alcohol and other Substance Abuse.



U.S. Department of Labor (DOL)

Employment Standards Administration

200 Constitution Avenue, NW

Washington, DC 20210

The DOL offers publications on compliance with labor laws.



U.S. Department of Treasury

Internal Revenue Service (IRS)

1500 Pennsylvania Avenue NW

Washington DC 20230

http://www.irs.gov/business/index.html 

The IRS offers information on tax requirements for small

businesses.



U.S. Environmental Protection Agency (EPA)

Small Business Ombudsman

1200 Pennsylvania Avenue NW

Washington, DC 20480

http://epa.gov/sbo

Hotline: 1-800-368-5888

The EPA offers more than 100 publications designed to help small

businesses understand how they can comply with EPA regulations.



U.S. Food and Drug Administration (FDA)

5600 Fishers Lane

Rockville MD 20857-0001

http://www.fda.gov

Hotline: 1-888-463-6332

The FDA offers information on packaging and labeling requirements

for food and food-related products.



For More Information



A librarian can help you locate the specific information you need

in reference books. Most libraries have a variety of directories,

indexes and encyclopedias that cover many business topics. They

also have other resources, such as



     *     Trade association information

           Ask the librarian to show you a directory of trade

           associations. Associations provide a valuable network

           of resources to their members through publications 

           and services such as newsletters, conferences and

           seminars.



     *     Books

           Many guidebooks, textbooks and manuals on small

           business are published annually. To find the names of

           books not in your local library check Books In Print,

           a directory of books currently available from

           publishers.



     *     Magazine and newspaper articles

           Business and professional magazines provide 

           information that is more current than that found in

           books and textbooks. There are a number of indexes to

           help you find specific articles in periodicals.



      *    Internet Search Engines



In addition to books and magazines, many libraries offer free

workshops, free access to computers and the Internet, lend 

skill-building tapes and have catalogues and brochures 

describing continuing education opportunities.

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