Small Business Accounting

Bookkeeping 101

Accounting System

Accounting Software : The Best of the Best

Profit and Loss Statement

Small business accounting overview 

Your small business accounting system, may contain most of the answers you need to survive, grow and even flourish in your small business enterprise. When most individuals begin a new operation, their small business accounting system is usually given very little thought, which is probably one of the most important factors contributing to the extraordinarily high rate of small business failure. A small business accounting system does not need to be complex and time-consuming.  At the very beginning, it can be nothing more than a business bank account, and a method for entering revenue receipts and expenses. However, it is extraordinarily important to take a few minutes each week to diligently enter this information into your small business accounting system.  

Bank account: 

A business bank account separate from your own personal account is an absolute necessity in any small business accounting system. In most cases you probably would want to set up a savings account in addition to a checking account.  All expenditures should be paid with checks or at the very least with a debit card, to enhance tracking of business expenditures.  All receipts should be deposited into the account and all expenditures should be made from the same account. It is very important to shop around for the right business checking account, as service charges vary considerably.  Also, Internet access to checking and savings accounts can also be incredibly helpful in monitoring cash flow.  Bank reconciliations should be done on a monthly basis to catch errors and potential business problems early in the process before they become monumental. 

Small Business Accounting System: Revenues and Expenses

Your small business accounting system should have a simple bookkeeping process that requires limited knowledge and time to maintain. Business supply stores such as Office Depot and OfficeMax usually carry an array of bookkeeping supplies for everything from very simple small business accounting systems, all the way to very complex systems. At the very least you should have a bookkeeping record which includes detail of weekly expenditures and also a section to enter revenue receipts on a weekly basis. 

The detail of weekly expenditures section should include columns to identify when merchandise, supplies or services are purchased along with to whom it was paid, check number, and the amount.  Also, there should be columns for account information to determine the specific category of business expenditures, such as auto expense, office supplies or tax expenses.  This will facilitate the collection of expense information in order to determine profitability and ultimately the amount of tax to be paid by the small business enterprise. 

Finally, revenue receipts need to be deposited directly into the bank account and information reported in the receipts section of your small business accounting record.  You should be able to make some relatively quick mathematical calculations at any point in time to make a relatively accurate determination of whether your business is currently profitable. You should easily be able to take your total receipts number and subtract the amount of total expenses for a number referred to as net income, which is the amount of income that you have received from your business before paying income taxes. 

Web page by Paul Susic MA Licensed Psychologist CEO/President Susic Psychological Consulting P.C.