Small Business Accounting Essentials

Hello and welcome to this course. My name is Agnieszka (ACCA and ATT Chartered Accountant) and I will be your guide for the rest of the course. In this short video, we discuss the course syllabus and a few administrative points.

In this lesson, we will define accounting and explain why it is considered the "language of business." You will learn about the key principles—consistency, relevance, reliability, and comparability—that guide accurate and meaningful financial reporting. You will understand the foundational concepts that make accounting essential for business success.

In this lesson, we will break down the steps of the accounting cycle, from identifying transactions to closing the books, ensuring you understand the process of maintaining accurate financial records. You will also learn the differences between shareholders and stakeholders and the importance of identifying internal and external users of financial information. You will learn how these concepts support effective decision-making and build trust with key stakeholders.

In this lesson, you will dive into the essential concept of double-entry bookkeeping, the "backbone" of accurate financial record-keeping. You’ll learn how every transaction impacts at least two accounts, ensuring the accounting equation stays balanced. Key terms like assets, liabilities, equity, income, and expenditure will be explained, along with practical examples to demonstrate how to record transactions using debits and credits.

In this lesson, we will explore the Chart of Accounts, the cornerstone of a company’s financial system. You will learn what it is, how it it structured, and the key components it includes, such as assets, liabilities, equity, income, and expenses. We will discuss its importance in maintaining accurate and organised records, ensuring consistent financial reporting, and enabling effective decision-making.

In this lesson, we will explore the essentials of invoicing, a critical aspect of business transactions. You will learn what invoices are, their main components, and how to create a professional invoice template for your business. Invoices are crucial in maintaining accurate financial records, managing cash flow, and strengthening client relationships.

In this lesson, we will focus on organising and storing invoices to streamline your financial processes. You will learn how to manage invoices effectively, whether using a manual or digital system, and how to structure your records for easy access. We will also discuss the importance of adhering to retention periods, secure data storage, and how these practices support smooth business operations and legal obligations.

In this lesson, we will dive into the step-by-step process of handling both income and expenditure invoices. Building on what we have covered about invoices so far, you will learn how to efficiently process them, from receiving and reviewing to recording and storing. For expenditure invoices, we will explore key steps like verifying details, scheduling payments, and ensuring secure storage. On the income side, we will walk through creating, sending, tracking, and recording invoices.

In this lesson, we will uncover why separating your personal and business finances is crucial for sound financial management. You will learn about the distinctions between sole traders and limited companies, the risks of not maintaining this separation, and practical steps to establish clear boundaries. We will also discuss how to address invoices correctly based on your business structure.

In this lesson, we focus on petty cash—a handy reserve for managing minor business expenses. You will earn what petty cash is, how to set it up, manage it effectively, and ensure its security. We will cover essential practices like maintaining a petty cash log, replenishing funds, and reconciling balances to ensure accuracy. You will also discover best practices for preventing misuse and fraud. By the end of this lesson, you will have the tools to manage petty cash confidently, supporting smooth day-to-day operations for your business.

In this lesson on bank reconciliations, you will learn how to match your financial records with your bank statements to ensure accuracy. This process helps detect fraud, manage cash flow, and maintain compliance. We will walk through the reconciliation process step-by-step, explore common discrepancies, and see how to resolve them. Additionally, you will learn how accounting software, like Xero, can streamline the process.

In this lesson on cash vs accrual accounting, you will learn the differences between these two methods. We will discuss the advantages and disadvantages of each, explore examples, and explain which method might be best for your business.

In this lesson, you will learn about aged debtors and creditors reports, which are crucial for managing cash flow and financial obligations. We will define debtors and creditors, explain how these reports track outstanding balances, and discuss their importance in both cash and accrual accounting. You will also understand their role in the cash flow cycle and how to manage them for better financial health.

This lesson focuses on managing debtors and creditors to maintain healthy cash flow in your business. It covers setting clear payment terms with customers, tracking overdue payments, and automating reminders. For creditors, it emphasises negotiating favourable terms, prioritising payments, and taking advantage of early payment discounts.

This lesson covers accounts receivable and payable under accrual accounting, including the differences between debtors and creditors, aged reports, and how to record transactions for both receivables and payables.

In this lesson, we cover the basics of depreciation, including the straight-line and reducing balance methods. You will learn how depreciation affects your financial statements and how to calculate depreciation for different types of assets.

In this lesson, we will cover the basics of bad and doubtful debts, including how to record and estimate them. You will learn how to account for these debts under accrual accounting, using methods like the percentage of receivables and aging analysis. We will also walk through practical examples to help clarify these concepts.

In this lesson, we will explore the four key types of adjusting entries: Accruals, Prepayments, Payroll Adjustments, and Inventory Adjustments. You will learn how each adjustment helps ensure your financial statements accurately reflect your business’s performance. We will cover definitions, examples, and journal entries for each adjustment type, focusing on how they align with the accrual basis of accounting.

In this lesson, you will learn about the Trial Balance, a critical step in the accounting cycle that ensures your books are accurate and ready for financial reporting. We will walk through the preparation process step-by-step, explore common errors—both visible and invisible—and provide tips to prevent them. By the end, you will understand how to identify discrepancies and maintain accurate financial records.

This lesson covers the Income Statement, a key financial document summarising a business’s performance. You will learn its importance, how to prepare it from a trial balance, and common issues to watch for, helping you make informed financial decisions.

This lesson introduces the Statement of Financial Position, also known as the Balance Sheet. You will learn its components, how to prepare it using a trial balance, and its role in assessing financial health, investment decisions, and creditworthiness.

This lesson introduces the basics of interpreting financial statements, focusing on the Income Statement and Statement of Financial Position. You will learn why analysing these statements is essential, explore key financial ratios, and understand how to identify trends and issues.

In this lesson I will show you how you can run your company's finances in Excel!

In this lesson, I will show you how to use Xero accounting software to run your finances.