A small business owner has to keep track of each of those expenses to ensure they are being paid, either through written-off receipts or by using software that automatically categorizes transactions to help with tax compliance (Bannister, 2013). Small businesses with employees should consider using QuickBooks Self-Employed or Microsoft Office 365 self-employed.
All small businesses keep track of their income and expenses through what is called a “book of accounts”. These books keep track of transactions that occur, such as sales, purchases, or the movement of money between accounts. These books are used to generate the business’s annual income statement and balance sheet. Small businesses record their transactions in one or more of the four major areas of a book of accounts: sales, purchases, expenses, and shareholders’ equity.
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