Exciting News! I have published a book to empower Small Business Owners to DIY Bookkeeping.

You may have come to this page from that book to view the FAQ. Or you may just have questions around managing your finances.

1. How should I handle bookkeeping for multiple income streams or product lines?

To track income and expenses by stream or product line, use your accounting software’s class, tag, or project tracking features. This lets you analyze profitability by category and make informed decisions about where to invest time and resources.

2. What’s the best way to reconcile bank and credit card statements accurately?

Use your software’s reconciliation feature to match transactions line-by-line with your bank and credit card statements. Look for duplicates, missing entries, or date discrepancies, and resolve them monthly to ensure your books reflect your true financial position.

3. How do I properly account for depreciation of assets in my books?

First, record the purchase of the asset under a Fixed Assets account. Then apply a depreciation schedule (like straight-line or declining balance) to allocate its cost over time. Many accounting systems (e.g., QuickBooks or Xero) let you automate this.

4. How should I record owner’s draws, capital contributions, and loans?

  • Owner’s draws: Record as reductions in the Owner’s Equity account, not an expense.

  • Capital contributions: Increase your Owner’s Capital or Equity account.

  • Shareholder loans: Record under Liabilities and keep documentation outlining repayment terms.

5. How do I manage accruals like unpaid invoices or upcoming expenses?

Use Accounts Receivable to track money owed to you and Accounts Payable for what you owe. Enter transactions based on invoice date, not payment date, to get a clearer view of your actual financial obligations and earnings.

6. How can I use financial reports to grow my business?

Regularly review:

  • Profit & Loss (P&L) to track income vs. expenses

  • Balance Sheet for assets, liabilities, and equity

  • Cash Flow Report to understand liquidity
    Use these to guide budgeting, pricing strategies, and investment planning.

7. What’s the proper way to handle sales tax in my bookkeeping system?

Set up Sales Tax Payable as a liability account. When a sale includes tax, record the tax portion here—not as revenue. Track the amounts owed to your local/state authority and remit them on schedule.

8. How do I prepare my books for an audit or investor review?

  • Keep accurate and consistent records

  • Digitally store all supporting documents (invoices, receipts, contracts)

  • Reconcile accounts monthly

  • Label all journal entries clearly
    Being audit-ready also improves your credibility with lenders and investors.

 

And if you still have questions, please click Buy Now for extra coaching hours from me.

9. How do I handle bookkeeping for recurring revenue or subscription models?

Set up recurring invoices in your accounting software and ensure payments are tracked against each billing cycle. Use deferred revenue accounts (a liability) if you're paid in advance for future services, recognizing income only as it's earned.

10. How should I manage payroll in my bookkeeping system?

Use a payroll service or built-in payroll feature to automate calculations, tax withholdings, and filings. In your books, record:

  • Gross wages as an expense

  • Employer taxes (like Social Security) as an additional expense

  • Net pay and withholdings as liabilities until paid to employees and tax authorities.

11. How do I track and manage retained earnings?

Retained earnings reflect cumulative profits (or losses) reinvested in the business. At year-end, net income automatically rolls into this account. You don’t record journal entries manually unless adjusting for prior-period errors or dividends/distributions.

12. How do I separate and track business use of personal assets (e.g., home office, car)?

Use allocation methods based on actual usage:

  • For home office, calculate a percentage of home-related expenses (rent, utilities, etc.) used for business.

  • For vehicle use, track mileage or actual expenses and apply a business-use percentage.
    Always document calculations and keep logs for tax compliance.

13. How should I record and reconcile third-party payment platforms like PayPal, Stripe, or Square?

Create a separate clearing account or bank feed in your bookkeeping software for each platform. Record gross sales, fees, and deposits:

  • Sales → Revenue

  • Fees → Expense (e.g., "Payment Processing Fees")

  • Payouts → Transfers to your main bank account
    Reconcile regularly to avoid missing transactions or overstating income.

14. How do I manage bookkeeping for inventory-based businesses?

Use inventory tracking in your accounting software to monitor stock levels, costs, and sales. When purchasing inventory, record it as an asset (Inventory account). When items are sold, move the cost from inventory to Cost of Goods Sold (COGS). Accurate inventory accounting is essential for both profitability analysis and tax compliance.

15. What’s the best way to prepare for quarterly or year-end financial reviews?

  • Reconcile all bank, credit card, and loan accounts

  • Review aged receivables/payables for outstanding issues

  • Ensure all expense categories are accurate and consistent

  • Run and analyze financial reports (P&L, Balance Sheet, Cash Flow)

  • Backup your data and check for supporting documentation
    Doing this quarterly keeps your books clean and avoids a stressful year-end scramble.

Hours