Small Business Accounting

Bookkeeping 101

Accounting System

Accounting Software : The Best of the Best

Profit and Loss Statement

Bookkeeping and keeping accurate records is fundamental to running any business. Meticulous bookkeeping is not only a good idea, but it is also the expectation of the IRS for you to do so.  Your bookkeeping records do not need to be complex, but they must be complete and accurate.  If you want to run a successful business, rather than having the business run you, you must keep track of everything that is taking place. Good bookkeeping habits will keep you in that position. 

If you are familiar with bookkeeping or accounting, you already know what I'm about to tell you.  If you're not, you may have a problem.  This web page is  not meant to describe all the concepts and terms involved in small business accounting or bookkeeping.  That would require hundreds and possibly thousands of web pages.  This web page has been developed to give you a fundamental understanding of the importance of accurate and meticulous bookkeeping to the operation of your business, and some ideas of what that may entail.  If you have any money to spare, I would recommend that you spend it to hire a good accountant to get you started in the right direction.  You can also take bookkeeping courses at a vocational school or community college.  Also, bookkeeping courses are also becoming more available online.  Also, a very good business book for small-business owners is the Small Time Operator by Bernard Kamoroff. 

If you have an extremely limited amount of money, or feel that you would like to try the business before hiring an accountant, I will try to describe the simplest bookkeeping system you can use that is acceptable to the IRS, for many small businesses.  The most basic bookkeeping method available to the small business is a single-entry system based on the cash accounting method. It provides a simple money-in/money-out record of daily transactions, as well as monthly and yearly totals.  However, be aware that as your business grows, or if you carry significant inventory, the IRS will expect you to use a different bookkeeping or accounting system known as the accrual accounting method. This basic single-entry cash accounting will be described on the Accounting System page. Below we will describe some quick tips on how to get you started with a simplified bookkeeping system, and then refer to the Accounting System page for a quick overview of this basic single entry system. 

• There are several very simple bookkeeping ledgers and single-entry accounting books available.  Some of the more popular ones are produced by the Dome, Safeguard, and Wilson-Jones companies.  The cost is usually about $10-$15 at stationery stores such as Office Depot and Staples.
• If you own a personal computer there are several programs that make bookkeeping easier and less prone to errors such as QuickBooks and Money 2004.
• With business growth, you will probably have to convert from a single-entry system to a more comprehensive bookkeeping system.
• As your business grows and bookkeeping becomes more complex, having an accountant available for advice can pay off in savings and tax dollars and much less of a hassle with the IRS.  These expenses are all tax deductible.
• A more detailed explanation of bookkeeping, and many other aspects of running your own business, may be found by reading Small Time Operator by Bernard Kamoroff (Bells Springs Publishing, Box 640 Bells Springs Rd., Laytonville, CA 95454).

Information by Start Your Own Business for $1,000 or Less