Guide to Small-Business Accounting: Tips and FAQs

While our professional accountants and bookkeepers would be glad to take on the heavy lifting of managing your company’s finances and improving your profitability, we know that taking the time to learn small-business accounting basics on your own can help you interpret and act on financial reports. We take a comprehensive approach to helping our clients, and that sometimes includes helping them to learn basic accounting. For a small business, the terms and documents we work with can seem daunting, but you can relax when you work with Ignite Spot. Let our experts in small-business accounting guide you toward a better understanding of what we do!

Accounting 101: Back to Basics

Use these small-business accounting tips and tricks to get started with managing your company’s money:

  1. Open a bank account for your business.
  2. Figure out a record-keeping solution that works for you. Often, this will be a piece of bookkeeping software, but you can work on paper or in basic spreadsheets if you prefer.
  3. Keep tabs on your spending, and hold onto your receipts.
  4. Learn how to issue accurate invoices.
  5. Look into applicable tax laws, and make sure to follow them.
  6. When you begin to add employees, set up a payroll system.
  7. Balance the books regularly to chart your financial progress.
  8. Re-evaluate your efforts regularly to find opportunities for savings or growth.

What Is the Accounting Cycle?

The accounting cycle consists of a series of steps that are constantly repeated to keep track of a company’s financial moves and their outcomes.

What Are the Ten Steps in the Accounting Cycle?

The ten steps of the accounting cycle are:

  1. Analyze the data about an economic event
  2. Record the transaction
  3. Record this data in the general ledger
  4. Prepare a trial balance
  5. Record adjusted entries
  6. Prepare an adjusted trial balance
  7. Prepare financial statements
  8. Record closing entries
  9. Prepare a closing trial balance
  10. Record reversing entries

What Are the Five Principles of Finance?

The financial principles that guide good accounting practices are consistency, timeliness, justification, documentation, and certification. The accountants at Ignite Spot adhere to these principles to ensure that all work is accurate, lawful, and completed on time.

What Are the Types of Investment?

Experts in small-business accounting guide their clients toward three main types of investment:

  • Lending investments, in which you’re essentially lending money by buying someone else’s debt
  • Ownership investments, in which you’re buying something that you will own in full or in part, such as real estate or shares of stock
  • Cash equivalents, things that you can easily liquidate, like money-market funds.

What Kind of Expenses Can I Write Off?

One of the most important accounting tips for small-business owners is to make sure that you’re aware of the tax deductions you can take. These include:

  • Auto expenses, such as mileage and gas, if your vehicle is used for your business
  • Travel expenses for business trips, including hotel stays
  • Equipment such as computers and software, furniture, and office fixtures
  • Marketing costs, including the costs associated with conventions and trade shows
  • Rent and utilities for your office space
  • Professional development courses
  • Charitable contributions and gifts for customers
  • Office supplies

The list of things you can write off is lengthy, and it’s not one fixed list: The IRS defines a write-off as any expense that you incur while producing income, so a lot of different things could qualify. One of the most important tips for small-business accounting is to carefully consider which expenses can be valid write-offs and which can’t really be justified, then proceed accordingly at tax time. Ignite Spot’s accountants can certainly guide you in this area, making sure that you don’t skip over a potential write-off.

How Much Does it Cost to Hire an Accountant for a Small Business?

If you’re thinking of hiring someone to be your guide to small-business accounting, consider that most accountants charge anywhere between $150 and $400 an hour for their services. However, Ignite Spot offers price packages tailored to your business needs. Our minimum monthly fees start at an average of $1,750 a month and increase based on the complexity of your business. Your price will depend on how often you need services and the extent of services you need. Let us be your small-business bookkeeping, accounting, and tax guide: Contact us today to learn more.

What Are Some Bookkeeping Services I Can Outsource?

Ignite Spot offers bookkeeping services including:

  • Creation of income statements
  • Creation of financial transaction databases
  • Checking reports for accuracy
  • Payment and management of accounts
  • Payroll processing
  • Production of balance sheets
  • Reporting irregularities in data