If you are in the process of starting a small business, it is important to have the financial end of things in order as well. Here are five different types of accounts that you are going to need to keep track off ass you establish your business.
The first type of account that you are going to need to keep track of is your income. Keep in mind that your income is not the same as your profit. Your income is all of the money that you earn from the products or services that you sell; it is not how much you make on those products or services. Keeping track of your income will allow you to accurately track your sales figures.
The second type of account that you will have to keep a record of are your business expenses. This is anything that you spend money on for your business, from your employee's salaries to the cost of making your products to your electrical bill. You may even have sub-accounts within your expense account for things such as employee expenses, product expenses, building expenses, etc.
When you own money to others, this is a liability. For example, if you are making payments on equipment, vehicles or property, even though those are long-term expenses, they would qualify as a liability because you are expected to eventually pay a large amount in full. If you have a large contract with a vendor and fall behind in your payments, that would also move from an expense to a liability.
Next, anything that your business owns is considered an asset. For example, if you own the equipment inside of your business, that is an asset. The profit that your business has built up and is accessible in your bank account is another asset. Any current inventory that you have is another asset.
#5 Owner's Equity
Finally, the last type of account that you need to keep track of is owner' equity. This is anything that your business doesn't just have but owns. If you own the building your business is based in, that counts as equity. If you fully own the equipment that your business works on, that is equity.
Some of these accounts, when you are a small business, may end up together, such as income and expenses. In order to keep track of everything though you should have separate tracking methods for each type of account listed above. Services like Dale K. Cline, CPA PLLC can help you with these efforts.