Small business accounting: 5 steps to start your books

Are you a small business just getting started? Getting started with your bookkeeping or accounting can be stressful for any new business owner.

5 steps to start your books

This guide will cover the following essential steps to ensure you don’t forget anything during this exciting time:

1. Open a Business Bank Account. Open a bank account for the sole purpose of your business. You don’t want to mix your business expenses with your personal ones.
2. Gather Receipts and Paid Invoices. Gather your receipts and paid invoices.  Apps, such as AutoEntry, can help you keep track.
3. Enter Your Expenses. Our bookkeeping template can help your keep track of the money you spent and the money you made.
4. Enter your Paid Invoices. There are two methods of recording the money you made: the cash method and the accrual method. Read this article to understand the difference.
5. Double Check Your Work aka Reconciliation. This last step is so important, and yet it’s often skipped.  Compare your records with your bank statements.

Download your free cash ledger bookkeeping template and follow along with the video.

Small business bookkeeping vs accounting

Accounting and bookkeeping are two terms that are sometimes used interchangeably. But they don’t mean the same thing.

So what’s the difference between bookkeeping and accounting?

Bookkeeping is simply the process of recording all the money that goes in and out of a business. It used to involve entering information into ledger books – hence the name – but most businesses now do it using accounting software.

Besides recording all income and outgoings, bookkeeping tasks also involve collecting and storing financial information such as receipts, invoices, and bank statements.

It involves paying bills and staff, reconciling bank statements, data entry, and paying taxes. Every business, from self-employed freelancers to major global corporations, must perform bookkeeping tasks.

Bookkeeping sits within the world of accounting and it’s often seen as the first step of a bigger process.

Business accounting is about interpreting complex financial data and using it to create reports and forecasts, generally in order to understanding the financial health and performance of a business.

While your business is still fairly small, it’s worth focusing on getting the basics of bookkeeping right since you have a legal obligation to record financial data.

Business accounting will certainly help in time but your priority should be to get on top of your books first.

Starting your books for the first time can often be a daunting task, but it doesn’t need to be! With our Quick Start Guide, we’ll help you get your books up
and running in just five easy steps!

Download your Quick Start Bookkeeping Guide below.

Looking for more Sage Advice on managing your small business finances? Check out these articles:

• How to manage your small business payroll taxes the easy way
• How to manage your hybrid workforce
• Boss your cash flow: 5 things to do right now
• 10 steps to grow your customer base