The basics of small business accounting are to maintain a complete record of all the business income and expenses, capture every single transaction and classify them into correct categories. Such as revenue, other revenue, cost of sales, payroll expenses, office expenses, transportation, etc.
This is a necessary chore that helps small business owners track and manage their money effectively – especially during the early stages. Besides keeping you cognizant about your business’s past and present performance, business accounting is also compulsory for the compliance of annual filing and corporate tax computation.
Accounting Steps to take note of
There are a few simple steps as follows:
1. Opening a bank account
You’ll need to open a bank account to deposit your business income once you’ve formally registered your company. Creating a separate bank account from your own personal account allows you to keep better track of your income and expenses.
By doing so you are advised to centralise all business transactions using the corporate bank account and avoid incurring any private expenses in this bank account.
2. A basic record of accounting
Accounting is the process of recording, classifying, and reconciling financial transactions on a daily basis.
To maintain basic accounting records, you should maintain the information below:
1.Date of transactions
3.Reference number (i.e. invoice/receipt number)
5.Date of payment
6.Paid via bank/cash
7.Total amount paid