As a business owner, you may know very little about accounting. It is not uncommon for a food service business to have an accountant that handles the details. This allows you to focus on the task of running the business and not on the accounting that is taking place. However, even if you do not take care of the majority of the accounting, you will want to understand a few basic things. It will ensure that you know what is going on with your business and help you make the best decisions.

1. Every business owner should utilize and understand financial statements. When you own a food service business, you will need to track everything from what you are spending each day to how much you are bringing in. This can be accomplished through using the right financial statements. The most common are the balance sheet, the income statement and the cash flow statement. If you take a look at the sheets, you will see how your business is doing in its daily operations. This lets you know whether you need to make any serious changes.
2. Beyond the day to day sales and expenses, there are a few things about your business that you should be aware of. The first of these is what assets the business owns. Your assets will be anything of value that you possess and do not owe money for. Your inventory is considered an asset. If you own the building it is an asset. The same is true for any equipment, furniture and of course cash.
3. On the opposite end, your business will have liabilities as well. Anything that you owe money for, is considered a liability to your business. It is just as important to know what the liabilities are as it is to understand what assets you have. When you make a decision about your business, you will do so based on what you have and what you owe. There are a couple of things that you will continue to owe money for as long as your business is around. On the other hand, there are things that can be paid off almost immediately which will help the business in the long term.
4. Even though inventory is considered an asset, it is also something that should be accounted for separately. As a business owner, you will want to keep track of what inventory your business has in stock. This way, you know what needs to be ordered and whether you are overspending on items that are not being used. Since your inventory is an asset, it should be considered for whenever you are establishing the worth of the business.
5. Many times you will work with vendors on a credit system. They will provide what you need and you will pay them at a later time. These accounts are known as accounts payable and are vital to your business accounting. Notes payable refers to any loans that you have taken and still owe money for. Both of these are something that any business owner should understand even if an accountant is hired.

You do not have to be an accounting expert to run your business. You do, however, have to understand the basics if you want to make the right decisions. This also lets you keep up with your accountant and ensure that they are handling things correctly.

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