How to Do Bookkeeping: Basics Every Small Business Owner Needs to Know

small business bookkeeping

Typically, these invoices are paid within an agreed-upon time frame. For example, a wholesale bakery that delivers fresh rolls to a coffee shop daily will have accounts receivable for services rendered. While there’s no hard and fast rule for the minute details of payroll, if you’re a new business, you’ll most likely wrap your payroll function inside of your bookkeeping software. Streamlining these functions will make your small business bookkeeping very tight, and eliminate the possibility for inconsistencies in your records.

small business bookkeeping

The bookkeeper enters relevant data such as date, price, quantity and sales tax (if applicable). When this is done in the accounting software, the invoice is created, and a journal entry is made, debiting Independent Contractor Agreement for Accountants and Bookkeepers the cash or accounts receivable account while crediting the sales account. The bookkeeping transactions can be recorded by hand in a journal or using a spreadsheet program like Microsoft Excel.

What Does a Bookkeeper Do for Your Small Business?

Accounts receivable refer to the money your customers owe you when you send them an invoice. Perfect for sole proprietors and freelancers, Wave Accounting offers a variety of bookkeeping features, such as sales, purchases, banking, and reporting options. There are three basic accounts that you will use for all of your bookkeeping transactions. Not only does bookkeeping help you manage your transactions properly, it also provides the information needed to obtain additional financing for your business.

Taken together, those components — among several others — make Quickbooks a crowd-pleasing small business accounting software. Intuit Quickbooks might be the first resource that comes to mind when you hear the term, “small business accounting software” — and for good reason. Beyond its first-rate suite of capabilities, the program sets itself apart with elements like receipt capture and 24/7 chat support.

Leverage bookkeeping to make your life easier during tax season.

That’s not to say that the software’s other features aren’t impressive — but if you’re primarily in the market for an exceptional inventory management solution, check OneUp out. It syncs with your bank, categorizes bank entries, and validates suggested entries so your books are done quickly and accurately. All told, those elements amount to roughly 95% automation of your accounting.

small business bookkeeping