Accounting isn’t the most glamorous part of running a business. Most entrepreneurs would rather spend their time developing their product line or growing their client base, looking at click through rate, conversions PPC costs, etc, but accounting is important.

Without it, your business will never reach its full potential. A lack of adequate accounting could even create legal problems that could easily have been avoided.

The purpose of accounting is two-fold:

• First, a basic small business accounting system generates a record of the receipts and expenditures of your business’ day to day activities. This data is vital for the completion of your annual tax returns and other legal documents. It will also be required by lenders when you apply for a  business loan.
• Second, business accounting provides you – the entrepreneur – with a valuable tool for assessing and analyzing your business’ performance. With just a little practice, you will begin to notice trends that highlight your business’ strengths and weaknesses. This information will help you make informed decisions about how to improve your bottom line.

The good news is that legally you are not required to maintain your financial records in any specific manner, as long as the records accurately reflect your business’ income and expenses. Most businesses maintain their records in a ledger, which is simply a record of sales receipts and expenditures

The process of transferring individual receipts and expenditures to a ledger is called posting. How often you post to your ledger usually depends on the volume of receipts and expenditures you need to record. Many businesses find it necessary to post to their ledger on a daily basis. However, you should plan to update your ledger on a weekly, or at least monthly basis.

Once you have posted your receipts and expenditures to the ledger, you can begin to compile financial reports for your business. The most common types of reports for businss are income & expense reports, cash flow reports, and a balance sheet.

The balance sheet is an itemization of your business’ assets (cash, inventories, accounts receivables, etc.) and liabilities (loans, debts, accounts payable). If done properly, a good balance sheet will provide an accurate snapshot of where you actually stand because accounts payable and accounts receivable items do not usually show up on in your receipts and expenditures ledger.

In a perfect world, your business would employ a bookkeeper to keep track of your finances. But since most entrepreneurs can’t afford to employ a bookkeeper (at least not initially), here are a couple of tips to help take the headache out of doing it yourself.

• Tip #1: Consult an accountant. You’re probably thinking the last thing you need is another expense. But unless you know how to do income tax reporting yourself, you’re going to need to find an accountant eventually anyway. By consulting an accountant to help set up your accounting system, you can save time and money when it comes time to prepare our income taxes, especially if you use the same accountant for both jobs.

• Tip #2: Purchase accounting software. One of the best things you can do for your business is to purchase small business accounting software. There are several affordable programs such as QuickBooks and Peachtree that not only keep track of your receipts and expenditures, but automatically translate them into quality financial reports as well.

I am an Accountant by profession so trust me when I say that we hate noting more than shoe box accounting where the business owners have everything shoved in a shoe box, and that is their record keeping. Not only does it cost the business owner more in professional fees but the business operator really does not take ownership of their business. It is just a job for them.

How can you track sales? How do you know what margins you are making? What are the most profitable products? How is you business performing against other in your niche?

Accounting may be a VERY boring part of business but trust me when I say that it is probably up there with one of the most important things that must be done.

You can sell anything you have at home as well as selling items using a drop ship method. If you do a search on the ebay site, you will see a whole variety of items that people are selling. They could be used items or brand new items that come from wholesalers. Either way, people will pay good money if you provide them with what they’re looking for.

Some people go so far as to buy items from flea markets and garage sales for the sole purpose of reselling them on ebay for a profit.

What skills are helpful?

There aren’t a lot of skills you would need to sell items on ebay. The ability to market your items will be the most important one to have. People can do a search on the site for the items you’re selling, but if you want to make money in this type of business, you will want to market those items elsewhere to get people to find them.

If you’re selling items from your home, you should be able to take a good photo of the item so people can see what shape the item is in.

What tools are needed?

Really, the only tools you should need to start this type of business is an account with e-bay to sell your items. If you plan to use a drop ship method, you would have to find a wholesaler that will ship the items direct to the customers. The best place I have found to date to find wholesalers and dropshippers is Salehoo. It is a New Zealand base company that has check out the best Wholesalers and Dropshippers around. Unlike other directories I have seen, Salehoo allows other to leave feedback on their experiences with the companies involved.

An access to a computer with a reliable internet access will be necessary to keep track of your sales. You will also need an online account like PayPal to receive money from your customers.

How do you get started?

Sign up for an account with Ebay that allows you to sell from them. Plan to purchase items from the site as well to help build your user ratings, so people will have a little more confidence in buying from you.

Place photos, if possible, of the items that you want to sell. Items that have a photo of items sell much faster than those that don’t. People like to see what it is they’re buying, so provide them with the best quality photo possible.

Review all informational materials as well as the rules on the Ebay website, to get tips on making more sales and how the process of selling on the site works.

Selling on Ebay is an excellent way to start your own online business. This gives you your first taste of an online business without having to have a lot of equipment to get you started. Plus, you get the benefit of getting rid of items that are cluttering up your home while you make a little money on the side.

There are also some good training and mentoring people around to help you get your Ebay business up and running. Matt and Amanda Clarkson from Bidding Buzz, whom I have known now for almost ten year, are probably the leaders in this area. They have gone from being a builder and personal trainer (and trust me Amanda was a task master when it came to personal training), to selling almost one million dollars a year online with ebay within a very short time. They are now passing on their knowledge.

I have decided to set this up to hopeful share some of the information I have discovered, people I have met and fun things I have found over the years with everybody.

I have been using the internet basically since it’s infancy. I was lucky enoug to have access to it’s predecisor while at University in the early ’90′s. Our IT lecturer allowed us to play on the Universities USERNET system, and I was hooked straight away. When it became more mainstream, I was in straight away and have not looked back.

I know, this sound just like a million other people in the world, but we all have our own stories to tell.

Well, thats the beginning. We all have to start somewhere. Right.