how to do simple accounting for small business

This inability to conform to GAAP’s requirements may not apply to very small businesses which only need to be able to illustrate a method of meeting reporting requirements for taxes and employees. Keep in mind, single-entry bookkeeping’s simplicity doesn’t allow for GAAP conformation. With the help of cloud accounting software for small-business bookkeeping, you can pretty much automate the process. Plus, it’s really not that much more complicated. The double entry method leaves less room for error, making it the better choice for balancing complex books. However, if your business is incorporated, or if it’s your sole source of income, the single-entry method just won’t cut it. For example, if you work full time but have a side business selling handmade jewelry, single-entry bookkeeping is probably enough to record your profits and expenses from that side business, so you can claim the amounts on your taxes. This can be sufficient for very small businesses that aren’t incorporated. Single-entry bookkeeping is simpler - you only have to record each transaction once. For example, if you make a $30 sale, in the double-entry system that transaction could be recorded as a gain in your income ledger, and as a deduction to the total value of your inventory. In single-entry bookkeeping, each transaction is recorded as a single entry in a ledger, while in double-entry bookkeeping, a transaction is recorded twice. What is the Difference Between Single-Entry and Double-Entry Bookkeeping? For digital records, QuickBooks allows you to easily delete or condense historic transaction data to save you storage space and secure sensitive financial information. Records older than six years can be securely disposed of by hiring a professional document shredding company. Making sure your records are well-organized can save you a big headache if you’re ever subjected to an audit.Īs a business owner, you’re required to keep financial and tax records for six years after the tax year in which they were received it’s a good idea to keep these archived records in both paper and digital formats for added security. Saving your records in the cloud also ensures that they’re easily accessible in a digital format from any device.

Take the time to organize your records, whether that means buying a filing cabinet or breaking out the label maker. An obsession with documentation is a good trait to have as a small business owner.

How to do simple accounting for small business