10 Tips for Better Small Business Bookkeeping


how to do bookkeeping for a small business

Rather than facing a major surprise when the taxman comes knocking, it’s a good idea that you budget for tax as you go along so you don’t have to pay a big chunk at once. Create a new business account, set budget aside for tax, keep your records organised and leave an audit trail. This blog will highlight even more useful bookkeeping tips and terms that you should be aware of. Consider using one of the best bookkeeping services to make managing your books a breeze. Perfect for small businesses searching for a truly simple solution, Kashoo offers plans and features that can accommodate any small business’s needs. Its functionality is straightforward but effective, and its pricing structure allows for unlimited users at a relatively low price point.

How do I start bookkeeping for beginners?

  1. Become familiar with and set up your chart of accounts.
  2. Begin to record all of your financial transactions.
  3. Reconcile bank accounts.
  4. Close the month and run financial statements.

The general ledger notates the account number to which the debit or credit is applied. The best accounting software automates a lot of the process in journal entries for regular debits and credits to help eliminate possible errors in data entry. Transferring and communicating information becomes simple and seamless while having a better grasp on your business’s financial health. One approach is to use software to manage your basic expenses and transactions, while also manually tracking your business accounting. However, it’s important to keep in mind that human error is a common cause of bookkeeping mistakes, accounting for approximately 80-90% of issues.

Reconciling every transaction

Simply turn your financial statements over to your CPA or other tax filings expert, and let them handle the rest. With an accounting system, you need to decide when to record transactions. With a cash account system, you’ll record transactions anytime cash changes hands. An accrual accounting system records transactions, like sales, immediately, even if money isn’t exchanged until later.

It includes first rate tools for inventory management, banking, time-tracking, and financial reporting — all backed by an industry-leading UX. The software sends invoices, tracks https://accounting-services.net/small-business-bookkeeping-services/ payments and expenses, and calculates what you owe come tax season. Time-tracking and collaboration tools are two things you won’t get with Sage, and payroll is a separate product.


For example, when money comes from a sale, it will credit the sales revenue account. Making sure transactions are properly assigned to accounts gives you the best view of Brigade Outsourced Accounting for Small Businesses & Non-profits your business and helps you extract the most helpful reports from your bookkeeping software. Another type of accounting method is the accrual-based accounting method.

how to do bookkeeping for a small business

Its primary function is sending, receiving, printing, and paying invoices, but it can also handle a business’ basic bookkeeping needs. This accounting software makes it easier for service-based businesses to send proposals, track time on projects, and receive payments. All plans allow you to track income and expenses, send invoices and receive payments, run reports, send estimates, track sales and taxes, and capture and organize receipts.

All-in-one money management

If the two sides don’t match, you’ve to turn pages of your ledger to rectify the mistake. The next option is desktop-based software, which requires a high upfront price. That’s why working with a real person who can help you make smart decisions with your business pays off. The difference between how much you sell a product for and how much the business actually takes home at the end of the day is what truly determines your ability to keep the doors open. Improving your store’s gross margin is the first step toward earning more income overall.

After all, if you don’t know how much you’re making or where that money is going, you’ll have a hard time finding ways to expand your profitability. If you want to outsource your small-business bookkeeping, there are several ways to find experienced bookkeepers. Outsourcing your bookkeeping is another option, and this guide on how to find the best virtual bookkeeping service can help you get the process started. Accounting and bookkeeping work hand in hand, and although many people refer to bookkeeping and accounting interchangeably, these two operations aren’t technically synonymous. Find out what bookkeepers do, and get an intro to double-entry bookkeeping. You should consult your own professional advisors for advice directly relating to your business or before taking action in relation to any of the content provided.

Guide to Choosing the Best Accounting Software for Small Businesses

These systems are designed to provide the necessary information and insights for making informed decisions, without overwhelming the user with unnecessary details. Your profit and loss statement (also known as P&L or an income statement), both for the current month and year-to-date, tells you how much you earned and how much you spent. Comparing your actual numbers to your planned numbers highlights where you may spend too much or not enough. Kashoo was created when founders Dobes Vandermeer and May Chu decided to make a simpler solution for small business accounting. While Zoho has all the applications a business could need, its integration with outside apps continues to be limited.

Effective bookkeeping is essential for the success of any small business. It involves organizing and categorizing all financial transactions to get a clear picture of the flow of money in and out of the business. While you’re at it, you’ll identify trouble spots and make adjustments to improve sales and margins.