Small business accounting
If you’re starting a business, then you’ll need to get familiar with some accounting basics. Let’s look at the main tasks, some time-saving tricks, and find out who can help with your small business accounting.
What is accounting?
Accounting tracks money as it comes and goes from a business. Some of that information is reported to the government to calculate taxes. But mostly the information helps you manage the business better.
Small business accounting basics
Accounting is a massive topic, but for most small businesses it boils down to:
Keeping records of business transactions (basic bookkeeping)
Creating accounting reports to help manage the business
Dealing with taxes
1. Keeping records of business transactions (bookkeeping)
A reliable and up-to-date picture of income versus costs will tell you:
if you’re profitable (or at least moving in that direction)
if you have enough cash coming in to pay upcoming bills
everything you (or your tax agent) needs to know to do tax returns
This record-keeping is commonly called bookkeeping, and it’s critical to good small business accounting. You can learn what’s involved and how to do it in our guide How to do bookkeeping.
Keeping the books: the early days
Keep tabs on your expenses as soon as you start incurring them. Hold onto receipts and write down what each one was for. Create a separate business bank account as soon as you can. Then your bank statement will double as a record of all your expenses.
2. Creating reports to help manage the business
If you’re working in the business, you’ll have a rough idea of how things are going. But you’ll want to base your strategic decisions on something more than instinct and gut feel. Small business accounting gives you the insights you need.