Tag: Accounting

Recording Expenses and Paying Bills Expenses keep the business alive — every dollar of cost needs to be captured, categorized correctly, and paid on time. Missed expenses mean overstated profit and overpaid taxes; late-paid bills mean damaged vendor relationships and late fees that buy you nothing. Bills vs. immediate purchases Money leaves your business in…

The Five Account Types and Your Chart of Accounts Every dollar in your business lives in one of five account types, and every transaction touches at least two of them. Learn the five, and you can classify anything. The five account types Assets — what the business owns. Cash, bank accounts, accounts receivable (money customers…

Chapter 3 — Debits and Credits, Demystified “Debit” and “credit” scare more small business owners than anything else in accounting. They are simpler than they sound — much of the confusion comes from the words meaning something different at the bank than in your books. Forget what your bank taught you On your bank statement,…

Chapter 2 — The Accounting Equation: Assets = Liabilities + Equity Everything in accounting — every journal entry, every financial statement, every audit — rests on one equation: Assets = Liabilities + Equity That is it. Memorize it, because nothing else in this book works without it. Every business transaction can be expressed in these…

Chapter 1 — Why Bookkeeping Matters (and What Happens Without It) Let us start with the most expensive sentence in small business: “I have money in the bank, so I must be doing fine.” You can have a healthy bank balance and still be in trouble. This is the single most important idea in bookkeeping:…

Introduction — Why This Book Exists If you have ever handed your tax preparer a shoebox of receipts in April, this book is for you. Maybe it is a desktop folder called “receipts-final-FINAL,” a pile of paper in the glove compartment of your work van, or thirty unopened bank statements in a drawer you keep…