What Is Small Business Accounting?

It is important to understand that small business accounting is the process of tracking, recording and analyze financial transactions for a business. This process provides a financial statement that speaks to the profitability of a company. It tracks money that goes in and out of the company’s business accounts, whether that be for sales, purchases, liabilities and/or payments to creditors or for business supplies. This procedure involves bookkeeping, creating financial reports and also filing important tax returns for the business. Ultimately, it helps to gauge the health and most importantly, the value, of a company in order to help them make better decisions for the organization going forward.

Bookkeeping for a Small Business

A business should keep all of the receipts of their sales and purchases with the amount, the date and other necessary information ready for the accountant. Ideally, the business will want to keep all of these receipts in one place, whether in a physical file or using online resources. From there, an accountant will make financial reports by using this information to create the financial status of the business. Reports such as balance sheets, profit and loss forecasts and cash flow analysis reports will be created from this information, and are critical to use to analyze the success of the company on an ongoing basis.

How Small Business Accounting Works

First, a dedicated bank account should exist for all business finances, and this should be kept separate from all other money transactions related to the business. Next, record all income and expenses and note what these are for as well. Choose the accounting method you will use, whether cash or accrual basis is the next requirement, and will be decided based on the type of business being conducted with the public. For example, with accrual accounting, you will make two entries for each transaction. You will record expenses and income when you receive them, regardless if it was cash or not. All transactions are listed in chronological order in this system, and there are advantages of using it over other systems. A professional accountant can review which specific accounting system will work the best for your organization.

Call to Schedule a Free Consultation With a Professional Accountant Today

If you're interested in learning more about small business accounting, call to schedule a free consultation today. At Daleyn Accountancy, our professional certified public accountants can help you develop a solid plan for conducting a merger or acquisition. Call us at 818-696-0866 and let us help you create a plan for a merger or acquisition that takes your company in the right direction. We serve Encino, Los Angeles, Thousand Oaks, Camarillo, Agoura Hills, Woodland Hills, Calabasas and surrounding communities.