(BQ) Part 2 book "Accounting for small business owners" has contents: The accounting cycle, making journal entries, setting up payroll, employee benefits and taxes, ordering equipment, ordering and receiving materials, overseeing production, the costs of doing business, inventory and cost of goods sold, receiving payment,.and other contents. | 2 BUSINESS SETUP W hen you start a small business, there are a lot of things to worry about, such as inventory and production, or scheduling jobs and paying bills. Will your business be a corporation that issues stock? Will you have to borrow money to finance start-up costs? How many employees will you need? With all these questions to answer, many new owners aren’t sure what to do about accounting (and ironically accounting is an , integral part of the answers to all these questions). A lot of owners mistakenly think that a checkbook is a proper accounting system. It’s not. The system you choose should be one that makes the process as easy and intuitive as possible so that you keep up with accounting duties. It can be relatively simple, or it can be more complex in how it’s set up and what it delivers—it all depends on your needs. Whatever system you go with, you’ll need to be able to keep track of all the money coming in and going out of your business. The largest differentiator between systems is whether they’re manual or computerized. In a manual system, you use an assortment of “journals”—either on paper or simple spreadsheets—and make entries manually for every transaction. Computerized systems and software do all the calculations for you, but entail a bit more of a learning curve at the start. Either is fine for a beginning small business, but once you get going you’re going to want a computerized system just for the ease and benefits of having it automatically add or subtract customer payments from the total owed and keep running totals of sales and expenses. We’re going to look at a few transactions below in terms of journal entries. But first let’s discuss the accounting cycle. THE ACCOUNTING CYCLE Every business transaction (a sale, a purchase, paying a bill) is recorded in an accounting journal. At the end of an accounting period (month, quarter, year) the entries are summarized and posted (moved, transferred) into a ledger, and then summarized. .
