Small business accounting can be overwhelming for a small business owner. Practicing good bookkeeping and accounting can make or break your business. Below we go over 10 basics to small business accounting.

  1. Cash: All of your business transactions pass through your cash account. Keeping proper records is so important that bookkeepers actually use two journals: Cash Receipts and Cash Disbursements to keep track of their cash flow.
  2. Accounts Receivable: This is for sales you’ve made but not collected the money for yet. Keeping track of your accounts receivable means you can send invoices in time and keep up to date on your finances.
  3. Inventory: This doesn’t apply to all businesses because some businesses sell services and not products. If you do sell physical products it is important to keep track of your inventory so you can stay fully stocked while not ordering too much product or running out of product.
  4. Accounts Payable: This is where you keep track of the money you owe other people or businesses. Good small business bookkeeping means you can pay your bills on time and keep good track of where your money is going.
  5. Loans Payable: This is where a small business keeps track of loan payments they may owe. Many small businesses take out loans for increases in inventory, equipment purchases, and other large financial needs.
  6. Sales: This is where you keep track of all incoming revenue to your business. Recording sales in a timely manner helps you understand your current revenue and can help you predict sales in the future.

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  7. Purchases: This is where you keep track of your business expenses such as raw materials or inventory that you purchase. Keeping track of this helps your business understand your cost of goods sold, and will also be useful for calculating deductions come tax time.

  8. Payroll Expenses: Payroll is a big part of a small business’s spending. Keeping accurate payroll records helps with your tax filing, as well as helping you budget for future payroll expenses.
  9. Owner’s Equity: This tracks the amount of capitol each owner puts into the business. Money put into the business is tracked in capital accounts, and money taken out appears in your business’s drawing accounts.
  10. Retained Earnings: This keeps track of your company’s profits that are reinvested into the business instead of being paid out to the owner(s). This can be important if you are looking for investors who want to see how well the company has preformed over time.

If you are looking for a Saint Louis small business accountant to help with your small business accounting, payroll, or tax needs, call STL Tax at (314) 645-1614.