Small Business Accounting
Learn Basic Bookkeeping Practices

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by L. Kenway BComm CPB Retired

Published 2010 | Edited May 29, 2024

WHAT'S IN THIS ARTICLE
Accounting Process | Bookkeeping Process | Good Bookkeeping Practices | Creating Audit Trails | Recording Bookkeeping Transactions | Procedures and Checklists | Performing Reconciliations and Month-End Procedures


Cool Glass of Water with Lemon SlicesStaying hydrated staves off fatigue and concentration issues.

Small business accounting hasn’t changed much over the years. It is an age old system designed to keep financial records in an organized way. However, the accounting tools have changed substantially over the years.

Small business or large corporation, by law, if you operate a business, you are required to keep adequate financial records.

In this article, you will find information on everyday problems about how to do basic bookkeeping for a small home-based company. It is a free bookkeeping resource for small business owners working from a home office.

Fill up your glass of water, get comfortable and let's begin!


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Welcome to Bookkeeping Essentials' Good Bookkeeping Practices!

The process of basic accounting is designed to introduce internal controls to safeguard the assets of the business because employees have access to these assets. Out of that process comes ...

... the products. The products of basic accounting are the financial reports.

The basic accounting process consists of:

This basic accounting process also referred to as the accounting cycle is discussed in The Accounting System and The Financial Reporting. As a self-employed business owner, you want to become familiar with accounting process basics.

Success is not defined by obtaining everything you want,

but by appreciating everything you have.

-- Unknown --

Here, in The Bookkeeping Practices, is where the basic bookkeeping process takes place. It consists of:

These are the regular bookkeeping chores that have to be done utilizing good bookkeeping practices or everything becomes disorganized and tedious.

Yesterday is a cancelled check. Tomorrow is a promissary note.
Today is cash ... Spend it wisely.

-- Unknown --

This section of the website will cover the daily, weekly, monthly, quarterly and annual tasks of small business accounting and transactions you need to watch out for ... so your financial product(s) - your financial statements - are accurate and timely ... to help you run your business.

Good To Know

There is some information in chats that is specific to Canadian sole proprietors. When possible, I try to find U.S. references for my American visitors.

I have created separate pages that deal specifically with U.S. tax compliance. It is a work-in-progress.

In general, SMALL business accounting and good bookkeeping practices between the Canada and the U.S. are similar. Canada switched to new GAAP standards called ASPE (Accounting Standards for Private Enterprise) in January 2011.

The US converged to similar standards called FRF for SMEs (Financial Reporting Framework for Small and Medium-Sized Entities) in June 2013 ... so the accounting standards are actually in transition during that  current time. If you had a small private business with no debt, you probably didn't notice the change in standards.

It should be noted that Canada adopted ASPE as GAAP compliant while FRF for SMEs was adopted as a non-GAAP alternative for SMEs that require reliable statements.


Executive Summaries

So let's get started. Below you will find executive summaries of each chat I've put together in this section ... instructions on the practical side of doing your books ... week in and week out throughout the year.

Just click on the link your choice and you'll go right to the information that brought you here today.

Benefits of Good Bookkeeping Practices

Good Bookkeeping Practices
What Do I Get Out Of It? How Does It Benefit Me?

Do you ever wonder if you are following good bookkeeping practices? You’re organized, keep up with the paperwork. Do you just cross your fingers, hold your breath hoping the tax assessor won’t call?

This article looks at:

  • the benefits of good bookkeeping practices;
  • the downside of poor record keeping;
  • how Canada Revenue Agency audits for non-compliance; and
  • the five categories of good bookkeeping practices are given.

Before you jump in to actually recording the transactions, you may want to take a few secs to read this short discussion on how to choose your accounting system ...Manual or Computerized System? - Small Business Accounting Decisions. No point in finding out after you've done hours of data entry that the system you choose wasn't a fit for your business situation.


5 Articles on
Recording Basic Bookkeeping Transactions

How to Create an Audit Trail

Always Have an Audit Trail
Protect Yourself and Your Business

An audit trail provides protection in the event of a dispute or a tax audit. It can also protect your business against fraud … and it’s a good bookkeeping practice.

Here's what's covered from a small business accounting perspective:

I can't stress enough how important it is in small business accounting to create an audit trail as an effective means of audit proofing your business.


Small Business Accounting Rules

How to Record Basic Bookkeeping Entries
Part 1

Common Bookkeeping Errors to Avoid
Part 2

Small Business Accounting Rules
Watch Out For These Basic Accounting Transactions!

Side step the common small business accounting problems business owners come up against so your books don’t stink.

I have written two chats on how to book some basic bookkeeping entries (record keeping examples) to help you avoid the worst bookkeeping errors.

The first chat has my method for learning those troublesome debits and credits. It also deals with accounts receivable, accounts payable and inventory, while the other article deals with capital assets, banking, taxes and year-end.

Parts of the second chat require an Insider's Pass. Visitors with an Insider's Pass should click here to view the entire article.

Here are just some of the journal entries I have posted so far:


You will also find a short sidebar on How the QuickBooks Undeposited Funds Account Works.

The Bookkeeping Forum has some questions and answers on how to deal with bank accounts denominated in foreign currency and the associated transaction gains/losses:

Foreign Currency Transactions discusses the GAAP accounting treatment for translating and reporting foreign currencies on your financial statements.

Foreign Exchange Transactions discusses how to book the exchange rate on a transaction in QuickBooks®.

Capital Lease versus Operating Lease
Is Your Vehicle Lease An Expense, An Asset or A Liability?

... Hmmm Good Question

This article looks at the difference between operating leases and capital leases ... and how to determine which category your lease falls into.

Information on vehicle and equipment purchases is also briefly discussed.


How to claim the inputs tax credits on your vehicle.

GST Input Tax Credits and ...
Business Use of Your Personal Vehicle

How to claim the input tax credits for business use of your personal vehicle. Both sole proprietors and corporations are discussed.

You will also find more information about business use of your personal vehicle in the Home Business Taxes - A Tax Planning Opportunity series.


6 Articles on
Basic Bookkeeping Procedures and Checklists

Common audit issues in Canada and the US

Common Audit Issues in Canada and the U.S.

This chat looks at the IRS audit techniques for cash businesses, Canadian sales tax audit issues and examines my research on U.S. and Canadian payroll tax audit issues. Read more here.


Small business account reconciliations

Small Business Accounting Reconciliations
Are They Necessary?

This chat on account reconciliations will look at:

  • Why it is important to do reconciliations as part of your small business accounting procedures.
  • What reconciliations should be done to verify the accuracy of your accounting records … and how often.
  • How to reconcile vendor statements to your accounts payable ledger.
  • A bookkeeping tool to help you with your month-end and year-end account reconciliations.
Accounting and bookkeeping checklist














Where to Find Your Download Link

Basic Accounting and Bookkeeping Checklists
What To Do and When

This article presents two checklists to help you. One is a list outlining the documents your new bookkeeper needs and the other list outlines what documents your accountant needs at year-end.

Bookkeeping checklists are really handy so I have also put together an eBook on some small business accounting and bookkeeping tasks that should be done.

I have categorized the tasks into six different bookkeeping checklists:

  • the daily bookkeeping checklist
  • the weekly bookkeeping checklist
  • the monthly bookkeeping checklist
  • the quarterly bookkeeping checklist
  • the annual bookkeeping checklist
  • the year-end bookkeeping checklist


The checklists can be purchased here.

Accounting and Bookkeeping Checklists eBook


1 eBook $5 CAD
2 eBooks $9 CAD (10% off)
5 eBooks $21.25 CAD (15% off)


Save 10% when you buy both of my eBooks.

$22.50 CAD

Learn monthend procedures.










Where to Find Your Download Link

Pre-MonthEnd Bookkeeping Checklist
Month-End Procedures

An important part of small business accounting is performing month-end procedures.

However, before you start month-end, read this chat on things to do before you start.

You will also find a sidebar chat on Deleting and Voiding Transactions in QuickBooks .. essential knowledge when you are performing month-end.

I have published an eManual on how to perform month end. These month-end procedures are intended for business owners working from home who do their own bookkeeping.

The eManual can be purchased here.


Invest $20 CAD in your business!
Buy 2 copies and save 10%
Buy 5 copies and save 15%

Save 10% when you buy both of my eBooks.

$22.50 CAD

Small Business Accounting
Month End and Year End Adjusting Entries

This article is only available to subscribers with an Insider's Pass. Click here to access the article.

A chat on the various types of adjusting entries booked by your professional bookkeeper or accountant. Accruals and Deferrals are included in the discussion.



Small business bookkeeping questions and answers

Small Business Accounting and Bookkeeping Help
Questions and Answers

Small Business Accounting and Bookkeeping Help
Questions and Answers

Small business accounting and bookkeeping help ... some frequently asked questions and answers for the home based business owner who does their own bookkeeping.

You'll also find links to all the questions asked in The Bookkeeping Forum that relate to the hands on practice of bookkeeping.

Following is a sampling of the frequently asked questions. Just click on the link to get the answer.


Wrap-Up

The goal of small business accounting procedures and processes is to help you package your work, maintain your files, record your transactions, and perform your reconciliations the same way all the time.

Consistency helps reduce errors and omissions. Streamlining your basic bookkeeping processes saves you time and gives you control over your numbers … freeing up your time to figure out how to make more money!

Happy posting!



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