Small Business Accounting and Bookkeeping for Beginners
                     Small Business Accounting and Bookkeeping for Beginners
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 it’s 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.
Basic Accounting Practices 
• Payroll: In most companies, payroll is the highest expense category. It involves 
employees pay, their withholdings and employer’s 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.
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. It’s 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.
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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