10 Simple Bookkeeping Examples for Small Businesses

The Accounts Payable Department

We understand that having to spend money on your business hurts a little on the inside. Accounts payable, on the other hand, gives you a far sharper picture of everything you spend. Consider this account to be a repository for the money your company owes to vendors in the form of bills and invoices.

If you're competent at bookkeeping, you'll be able to make timely payments while also avoiding paying someone twice.

Accounts Payables

AR (accounts receivable) is the polar opposite of AP (accounts payable). If you sell a product or service but don't get paid right away, your small business has receivables, which you keep track of in this account.

AR refers to money owed to you by your customers. It's critical that you maintain this up to date so you can send accurate and timely bills and invoices.

Money

This is perhaps the easiest one on the list. A cash account is one where all of your business transactions are recorded in order to keep track of your finances. A cash account is also the most straightforward way to track cash payments, withdrawals, and deposits.

Inventories

All of the products in your company's inventory (whether they're in the back or on the shelf) must be meticulously tracked and accountants for. This step is critical because physical counts of the merchandise on hand should match the amounts in your records.

There are two ways to keep track of inventory. Either on a daily, monthly, yearly, or any other schedule that suits your company's demands. Alternatively, if you make a sale, do whatever is most convenient for you and your company.

Repayable Loans

Assume you've taken out a loan. It might be anything from purchasing computer equipment to purchasing a vehicle to assist you in getting from point A to point B while on the job, as well as purchasing furniture and other stuff for your business. All of these expenses are tracked in the loans payable account, which keeps track of what you owe and when you have to pay it.

Equity in the business

The owner's equity account tracks how much each owner invests in the company. Because small enterprises are typically owned by a single person or a group of partners, there are no true stock shares to split ownership.

Rather, all money paid into the business is recorded in capital accounts, while money taken out is recorded in drawing accounts. What's vital here is that all of the owners' equity accounts should be meticulously recorded in your books.

Purchases number seven.

When doing your books, you should also look at the purchasing account. This is where you'll keep track of any raw materials or completed commodities you purchase for your company.

It's a key element of determining the cost of products sold, which you remove from the sales account to get the gross profit of your company.

Payroll Expenses are number eight on the list.

If you have staff in your small business, this may be the most significant cost and an account you can't overlook when completing your books.

No one wants to labour for nothing. As a result, keeping this account correct and up-to-date is critical for meeting tax preparation requirements. If you ignore this, don't be shocked if you end up in trouble with the IRS.

Earnings Retained

The retained earnings account is one that tracks your company's income that you reinvest in the business rather than keeping for yourself or paying out to other owners when you do your books.

Retained profits are cumulative, which means they'll show up as a running total of money you've kept since the beginning of your firm. In all honesty, it doesn't take much work to manage this account, so keep track of it to see how much your company has grown.

Profits

Another essential but vital account to keep track of when completing your books. The sales account is where you record all incoming revenue from what you sell, so it's no surprise that business owners adore it.

Make sure you keep accurate and timely records of your sales so you know where your company stands. Remember, the goal is to help your company develop while still keeping HMRC at bay.