Guides & How-To
Practical, no-jargon answers to the questions small business owners, freelancers, and startups ask most. Bookkeeping, invoicing, reconciliation, tax and GST — written to be actionable.
Bookkeeping & Accounting
What is bookkeeping and why is it important?
Bookkeeping is the systematic recording of all financial transactions in a business. It provides the foundation for accurate financial reporting, tax compliance, and informed decision-making.
Read guideWhat is the difference between bookkeeping and accounting?
Bookkeeping is the recording and organizing of financial transactions, while accounting involves interpreting, analyzing, and reporting on that financial data for decision-making and compliance.
Read guideHow do I do bookkeeping for a small business?
Start by separating personal and business finances, choosing an accounting method, setting up a chart of accounts, recording transactions regularly, and reconciling your bank accounts monthly.
Read guideWhat are the basic bookkeeping tasks?
Basic bookkeeping tasks include recording transactions, categorizing expenses, reconciling bank accounts, managing invoices, tracking accounts payable and receivable, and generating financial reports.
Read guideHow often should I do my bookkeeping?
Most businesses should review and categorize transactions weekly, reconcile bank accounts monthly, and perform a comprehensive financial review quarterly.
Read guideWhat is double-entry bookkeeping?
Double-entry bookkeeping is a system where every financial transaction is recorded in at least two accounts: a debit and a credit. This ensures the accounting equation (Assets = Liabilities + Equity) always stays balanced.
Read guideWhat is single-entry bookkeeping?
Single-entry bookkeeping records each transaction only once, typically as either income or an expense. It is simpler than double-entry but provides less financial visibility and no built-in error checking.
Read guideWhat is accrual vs cash accounting?
Cash accounting records transactions when money changes hands. Accrual accounting records revenue when earned and expenses when incurred, regardless of when payment occurs. Accrual provides a more accurate financial picture.
Read guideWhat is a chart of accounts?
A chart of accounts is a complete list of all financial accounts used by a business, organized by type: assets, liabilities, equity, revenue, and expenses. It serves as the structural framework for your entire accounting system.
Read guideHow do I set up a chart of accounts for my business?
Start with a template for your industry, customize it to fit your specific business activities, organize accounts by type (assets, liabilities, equity, revenue, expenses), and keep the structure simple enough to be useful without being overwhelming.
Read guideWhat is a general ledger?
A general ledger is the master record of all financial transactions in a business, organized by account. It contains the complete history of every debit and credit entry and serves as the basis for all financial statements.
Read guideWhat is a journal entry in accounting?
A journal entry is a record of a financial transaction in the accounting system, containing the date, accounts affected, debit and credit amounts, and a description. It is the fundamental building block of double-entry bookkeeping.
Read guideWhat are adjusting entries?
Adjusting entries are journal entries made at the end of an accounting period to ensure that revenue and expenses are recorded in the correct period. They update account balances before financial statements are prepared.
Read guideWhat is the accounting cycle?
The accounting cycle is the complete sequence of steps a business follows to record, process, and report its financial transactions during an accounting period, from identifying transactions through closing the books.
Read guideWhat are closing entries?
Closing entries are journal entries made at the end of an accounting period to transfer the balances of temporary accounts (revenue, expenses, dividends) to retained earnings, resetting them to zero for the next period.
Read guideWhat is a trial balance?
A trial balance is a report listing all general ledger accounts and their balances at a specific point in time. It verifies that total debits equal total credits, serving as a check on the mathematical accuracy of your bookkeeping.
Read guideWhat is the difference between assets and liabilities?
Assets are resources your business owns that have economic value, such as cash, equipment, and receivables. Liabilities are obligations your business owes to others, such as loans, accounts payable, and taxes owed.
Read guideWhat is equity in accounting?
Equity represents the owner's residual interest in the business after all liabilities are subtracted from all assets. It includes the owner's original investment plus retained earnings minus any withdrawals.
Read guideWhat is retained earnings?
Retained earnings is the cumulative amount of net income a business has kept over time rather than distributing to owners as dividends. It appears in the equity section of the balance sheet and represents reinvested profits.
Read guideWhat is goodwill in accounting?
Goodwill is an intangible asset that arises when a company acquires another business for more than the fair value of its identifiable net assets. It represents the value of brand reputation, customer relationships, and other non-quantifiable factors.
Read guideWhat is depreciation and how do I calculate it?
Depreciation is the process of allocating the cost of a tangible asset over its useful life. It reflects the gradual wear and reduction in value of assets like equipment, vehicles, and buildings.
Read guideWhat is amortization?
Amortization is the process of spreading the cost of an intangible asset over its useful life. It also refers to the gradual repayment of a loan principal through scheduled payments.
Read guideWhat is FIFO vs LIFO inventory?
FIFO (First In, First Out) assumes the oldest inventory is sold first. LIFO (Last In, First Out) assumes the newest inventory is sold first. The choice affects cost of goods sold, profit, and taxes.
Read guideWhat is weighted average cost?
Weighted average cost is an inventory valuation method that calculates a single average cost per unit by dividing the total cost of goods available for sale by the total number of units available. This average is used for both COGS and ending inventory.
Read guideWhat is cost of goods sold (COGS)?
Cost of goods sold (COGS) is the total direct cost of producing or purchasing the goods that a company sells during a period. It includes materials, direct labor, and manufacturing overhead, and is subtracted from revenue to calculate gross profit.
Read guideWhat is gross profit margin?
Gross profit margin is the percentage of revenue remaining after subtracting cost of goods sold. It shows how efficiently a business produces or acquires its products, calculated as (Revenue minus COGS) divided by Revenue times 100.
Read guideWhat is net profit margin?
Net profit margin is the percentage of revenue that remains as profit after all expenses, including COGS, operating expenses, interest, and taxes, are deducted. It is calculated as Net Income divided by Revenue times 100.
Read guideWhat is EBITDA?
EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization. It measures a company's operating profitability by excluding non-operating and non-cash expenses, making it useful for comparing businesses.
Read guideWhat is working capital?
Working capital is the difference between a company's current assets and current liabilities. It measures a business's ability to meet short-term obligations and fund day-to-day operations.
Read guideWhat is break-even point?
The break-even point is the level of sales at which total revenue equals total costs, resulting in neither profit nor loss. It tells you how much you need to sell before your business starts making money.
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