Small business bookkeeping is the process of tracking and organizing all the financial transactions that occur daily in the business. This includes any sales you may have had, any purchases made, and any bills paid. All money going in and coming out of the business must be tracked for proper bookkeeping. Once the transactions are organized and categorized correctly, they are posted to journals, either using the single-entry or double-entry method. Both methods have their pros and cons, so it just depends on what works best for your business. How those transactions are posted also depends on whether you are using cash-basis or accrual-basis accounting. Again, which method you use all depends on your business’s needs. After your transactions are all recorded, at the end of the period (usually monthly) your financial statements should be produced.
These statements are invaluable to business owners. The financial statements are used to make business decisions, such as where to devote more capital or where you can save money and are also used to attract lenders and investors. Without reliable financial statements, you would be making decisions blindly, which could have devastating effects on your business’s financial health. Proper bookkeeping is essential to running a successful business.