Bookkeeping for Small Businesses – Managing expenses and income
What is Bookkeeping?
Bookkeeping is the process of recording the financial transactions of your business - every sale, every purchase, every payment, and every bill. Good bookkeeping helps you:
- Know if your business is profitable
- Stay compliant with tax laws
- Make informed financial decisions
- Avoid cash flow shortages
Tracking Income (Revenue)
Your income is money coming into the business from:
✔ Product or service sales
✔ Customer retainers or deposits
✔ Commissions or royalties
✔ Interest or investment income
How to record income:
| Transaction Example | Where to Record | Notes |
| Customer pays cash | Sales / Revenue | Issue receipts/invoices |
| Bank transfer received | Bank Account | Match to an invoice |
| Online sales (e.g., Shopify) | Revenue Account | Track platform fees separately |
Always reconcile income with bank deposits to avoid missing any revenue.
Tracking Expenses
Expenses are costs incurred to operate your business:
Main expense categories:
| Category | Examples |
| Cost of Goods Sold (COGS) | Raw materials, inventory |
| Operating Expenses | Rent, internet, utilities |
| Marketing & Sales | Ads, website costs |
| Admin Expenses | Office supplies, software |
| Payroll | Salaries, contractor payments |
| Tax & Licenses | Business registration fees |
Best practices for expense management:
- Keep proof (receipts, invoices)
- Categorize consistently
- Store bills digitally
- Separate business & personal expenses
Tools You Can Use
| Type | Example Tools | Best For |
| Spreadsheets | Excel, Google Sheets | Sole proprietors or very small businesses |
| Accounting Software | QuickBooks, Xero, Sage, Zoho Books, Wave | Businesses needing automation & reporting |
| POS Systems | Square, Shopify | Retail & e-commerce |
The Bookkeeping Cycle
- Record transactions (daily/weekly
- Categorize income & expenses
- Reconcile accounts with bank statements
- Review financial reports
Key financial statements:
- Profit & Loss Statement - Are you making money?
- Balance Sheet - What do you own vs owe?
- Cash Flow Statement - Can you pay your bills?
Tips for Staying Organized
- Set a weekly bookkeeping routine
- Use cloud storage for documents
- Track mileage if you travel for business
- Create separate bank & credit accounts for the business
- Review finances before making major decisions
The above is a clear and beginner-friendly overview of Bookkeeping for Small Businesses. It is an introduction to Managing Expenses & Income - perfect if you’re just starting or want to improve how you track your finances. If you need assistance in setting up your own bookkeeping systems, feel free to contact us at Tickbirds, your go-to accounting and bookkeeping partner.