Bookkeeping for Small Businesses

When it comes to paperwork for a business, hardly anything is more important than the books. A business’s accounting documents tell the owner whether they’re making a profit or not, how to improve profits, and how much taxes they need to pay. Bookkeeping is something that cannot be ignored if you want your business to be both run well, and run legally. Many small businesses actually end up closing down due to poor bookkeeping practices when the tax bill comes due.

If you’re in the USA you can learn a lot about bookkeeping for small businesses for free right on the IRS site. In many cases it’s more information than you need, but it is good to take a look at the resources available to you. You can even sign up for a newsletter focused on your area so that you can get alerts to new laws and new requirements and more. But in general all bookkeeping does is keep track of income and expenses.

When you realize that bookkeeping is simply keeping track of what goes in and what goes out of your business, it becomes a lot less scary. You don’t need to understand debits and credits to understand that what goes out is an expense, and what comes in is income.

To take that further regarding expenses, anything that is necessary to run your business is considered an expense. There are some special rules regarding expenses that you should take a look at. One of the best books you can buy regarding small business taxes is Small Business Taxes Made Easy by Eva Rosenberg. She truly does make it simple and less scary.

We are really lucky today to live in the era of technology. Today there are software programs that can help you keep track automatically of your income and expenses, and that will work fine for a super small business. There are also a few more complicated programs to help you if you have a more complicated business. It is important that you use some software like Outright, Kashoo or Quicken to keep track of your income and expenses. Alternatively, you can use a simple spreadsheet. However, people who use automated programs who do not have a bookkeeper tend to do better with keeping track.

In addition to the technology available, it’s good to still have the old-fashioned shoe box in which to keep all receipts associated with your business. If you make it a practice to put receipts in your in box, enter them if needed into your spreadsheet or software, then toss them into a shoe box or file for the end of the year, you’ll save yourself a lot of hassle and time when it comes to doing your taxes.

Most sole proprietor taxes are so easy to do when the proper books have been kept and receipts have been saved, that the taxes can be done in 15 minutes or less using a program such as TurboTax. When you’re done with your taxes, print out a copy for yourself, put them in a manila envelope with your receipts and other paperwork, write the year on the outside and store in a secure location.

If you do choose to hire an accountant or a bookkeeper, be sure to check to see if they are licensed and have kept their certifications up-to-date. The American Institute of Professional Bookkeepers ( offers a free bookkeepers’ hiring test to any business owner who is thinking of hiring a bookkeeper. This is an essential step to hiring someone because even if you hire an expert, when it comes to being compliant with the law you are the one ultimately responsible. So make sure you understand everything they do and everything you sign.


IRS Bookkeeping Information

Small Business Taxes Made Easy by Eva Rosenberg

Bookkeeping Hiring Test

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