Let’s Buy a Business SMB Financial Basics with Darin Pierson
Nov 19, 2024
Darin Pierson, a seasoned bookkeeper and CPA with real-world experience in business ownership, shares invaluable insights into SMB financial fundamentals. He discusses the four ways money comes in and out of a business, emphasizing the difference between cash and accrual accounting. Darin explains how to assess whether a bookkeeper is effective and sheds light on the importance of accurate financial records for evaluating business health. He also introduces his free course on SMB Financial Basics, a resource designed for aspiring entrepreneurs.
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Four Ways Money Moves
- Money flows in and out of a business in four key ways each, mirroring each other exactly.
- Understanding these flows is essential for accurate bookkeeping and financial clarity.
Cash Accounting Basics
- Use cash basis accounting to record transactions only when cash changes hands.
- This method suits simple service businesses without complex inventory needs.
Why Accrual Matters
- Use accrual accounting to match expenses to revenue in the period when they're incurred, not just when cash moves.
- This approach prevents distorted financial statements due to large, irregular purchases like inventory.