Small Business Accounting and Bookkeeping for Beginners

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• Small Business Accounting and Bookkeeping for
  Beginners

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Small Business Accounting and Bookkeeping for
Beginners

• There is a massive influx of small business
  owners in the market. These businesses need a
  customized accounting solution. Start-up
  entrepreneurs have built amazing teams, built an
  awesome customer base and a diverse workplace.
  However, accounting and bookkeeping are not a
  priority for these businesses.
• Lately its been estimated that 1/5th of small
  businesses in the US are not using any
  bookkeeping service of any type. This will lead
  to problems at many levels soon. There are
  multiple accounting firms and consultants that
  enable start-ups and small businesses by
  customizing their accounting needs. These firms
  perform single task to full-service accounting.
  They also support tax filing for where you are
  based.

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Basic Accounting Practices

• Payroll In most companies, payroll is the
  highest expense category. It involves employees
  pay, their withholdings and employers match.
  There are taxes as well and hence important to
  keep a detailed record of each payroll entry
  because a small error could be fatal when it
  comes to payroll tax payments and lead to more
  expenses in your business in terms of penalties.
• Owners Equity This represents the amount
  invested by founders into the business and what
  percentage is held by whom. The equity ownership
  will dilute as the number of investors increase.
  A full Cap Table (Capitalization table) is
  maintained and updated at every round of
  financing.
• Retained Earnings This represents profit made
  from business which is reinvested into the
  business.

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Basic Accounting Practices

• Loan Payables This is to account for all your
  borrowings or the debts you take for the
  business. This will involve loans from banks or
  financial institutions. Accountants and
  Bookkeeping service providers will need proper
  documents and paperwork for this. These are
  liabilities that need to be paid within a
  stipulated period.
• Sales The revenue is the lifeline of the
  business. Its important to track every dollar
  derived from your products and services. This
  should be done immediately. It impacts inventory
  and Cash accounts directly.
• Purchase All businesses need initial investment.
  Each purchase needs to be recorded accurately
  with the date and dollar amount and a detail of
  what it pertains to needs to be mentioned.

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Basic Accounting Practices

• Cash Cash is King. Initial business expenses are
  usually in cash It is so important to record all
  the expenses and income properly. This is because
  these transactions will have to pass through the
  cash account. You should be able to provide the
  cash receipt and cash disbursement to your
  accountant.
• Account Receivables (AR) Receivables involves
  recording and collecting money from customers for
  the invoices that have been raised. The sooner
  your customers pay the more cash you will have to
  re-invest in your business. Although cash sales
  in great for business, that will mostly not
  happen. Most businesses run on credit. Credit
  terms need to be as per industry standards or as
  per the competing businesses. Proper recording of
  the credit sales is very crucial for the
  business.
• Inventories This involves keeping an accurate
  account of sold and unsold products by looking at
  the records and doing a physical count of the
  products. Always do a thorough check as these
  products represent cash sitting in your store or
  warehouse.

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