Accounting for small businesses is done by keeping a complete record of all the income and expenses and accurately extracting financial information from business transactions. This is a necessary chore that helps small business owners track and manage their money effectively. Besides keeping us informed about the business’s past and present performance, small business accounting also helps in generating invoices and completing payroll.

Balance Sheet:

Balance sheets measure what a company owns and owes. This type of statement provides a snapshot of a small business’s financial health at a specific point in time. Bookkeepers can view the company’s assets and liability figures briefly. Companies typically prepare balance sheets at the end of every quarter, but individuals can prepare them at any time. Assets, liabilities, and shareholders’ equity comprise a balance sheet.

Income Statement:

Income statements often referred to as profit and loss statements, summarize a small business’s revenues and expenses over a specific period. Companies typically prepare quarterly and annual income statements. Income statements focus on four key items — revenue, gains, expenses, and losses — which bookkeepers use to calculate net income.

Cash Flow Statement:

Cash flow statements summarize the amount of money entering and leaving a company. These statements focus exclusively on liquid assets like cash and cash equivalents — investments that individuals can readily turn into cash. Accountants calculate cash flow by adjusting a business’s income statement. Through addition and subtraction, bookkeepers remove non-cash items and transactions from the net income. Components of a cash flow statement include operating activities, investing activities, and financing activities. raamatupidamisteenuse hind

And finally, the steps you need to follow in order to do accounting for your small business, are the following:

  • Choose an accounting system
  • Open a business bank account
  • Decide on a bookkeeping method
  • Track all your business expenses