All you need to know about small business accounting

This article includes tips, suggestions and general information. We recommend that you always do your own research and consider getting independent tax, financial and legal advice before making any important decision.

One of the hurdles you may encounter when setting up a small business is accounting. It seems there’s so much to learn, and forms to fill in. But it doesn’t have to be daunting.

We’ve made this quick guide to help you understand how to get your small business accounting up and running, stress-free.

What is involved in business accounting?

Running a small business’ books efficiently means juggling several vital tasks, each one important for compliance, control, and healthy growth:

• Recording & capturing: Logging every sale, expense and receipt. This can be unnecessarily time-consuming and error-prone without automation.
• Invoicing: Issuing and tracking customer invoices. The faster you get paid, the healthier your cash flow can be.
• Payroll: Paying staff correctly and on time at the same time, also accounting for any arrears that have built up from previous errors.
• Paying suppliers: Managing timely payments and avoiding late fees. If your suppliers are paid reliably, you’ll likely receive good service and preferential treatment.
• Accounting cash flow: Monitoring money in/out to help prevent surprises. The more accurate you are here, the more accurate your forecast cash flow can be.
• Financial reports: Summarising performance via balance sheets and P&Ls is essential for insightful and actionable business performance analytics.

Efficient bookkeeping can make this all easy: it saves time and helps avoid mistakes. Having a clear accounting checklist keeps you on track and helps avoid that mad scramble at the end of every fiscal year.

Choose the right small business accounting software

Luckily for today’s business owners, it’s easy to manage your accounts. High-quality modern accounting software saves time and reduces mistakes—meaning less time copy and pasting your figures into multiple spreadsheets, and more time doing the things you love.

With several accounting software options on the market, how do you choose the right one for you? Here’s our accounting software checklist:

POS integration: If you’re already set up with a point-of-sale (‘POS’), or you’re thinking of getting one, make sure you choose POS and accounting software that are compatible with each other.

Payroll: If you have staff or want to manage your payroll, look out for software that includes a payroll feature.

Cloud-based: Keeping your data on the cloud means you can securely access it from multiple devices, so it helps to reduce the risk of theft or loss.

Easy-to-understand: It’s great to keep your accounts in one place, but not very helpful if you can’t interpret the numbers or easily navigate the software. Choose something that’s intuitive and simple.

Expenses: It should be easy to upload and bookkeep your expenses with your new software—some even feature a mobile scanning app for your receipts.

How the right POS can help

Your point-of-sale is your home base while you’re selling, but its benefits go beyond sales. Having a great POS system can be the secret to running your business accounts smoothly.

As well as fast sales and easy management in-store, a good POS can offer you a way to gather all your data so you can understand and optimise your business.

The power of reports

In most modern POS platforms, you’ll be able to track your sales in real time. Some will also offer the extra bonus of seeing staff performance and stock levels. A great POS will show you, in simple terms, which products have sold the most, and during which period.

When you can see all your sales, staff and stock numbers in one place, you can make data-driven business decisions. If you know that on Sundays, there’s a rush for tea and cake around 3pm, you can ensure you have enough staff, a fresh cake delivery, and plenty of clean cups ready—so no customers need to wait or leave empty handed.

Equally, if you see a trend for no sales until 1pm on Monday, you can adjust your hours, staff and deliveries and save money.

Thanks to its real-time visibility, modern POS reporting tools can efficiently guide smarter and more profitable business decisions.

Avoid overstaffing and understaffing: Labour reports align your staffing with demand, meaning no more overstaffing (which leads to inflated costs) or understaffing (which frustrates customers).

Optimise order quantities and save: POS analytics can accurately forecast demand, so you can order less of the slow movers and more of the big sellers.

Catch seasonal trends: Sales reports reveal when product sales spike and when they dip. Essential for subtle menu tweaking and targeted promotions.

Reduce waste and prevent stockouts: Reveal what’s selling and when, what’s sitting and why, and what’s expected to run out soon. This helps cut waste and avoid lost sales.

Everything in one place

We recommend choosing a POS and accounting software combination that can integrate seamlessly, meaning you can see all your numbers in one place and know that they match up perfectly with your books without any extra manual input necessary.

PayPal’s point‑of‑sale works with accounting software

The PayPal POS system doesn’t just take payments. It seamlessly feeds your accounting software, saving your business precious time while improving accuracy.

Benefits of integration:

• Time‑saving: Cuts out manual data entry by syncing sales and fees automatically.
• Real‑time insights: Sales, inventory and performance metrics in one dashboard.
• Streamlined bookkeeping: Matches POS data to accounting ledgers, seriously reducing errors.
• PayPal accounting advantages: Our POS software works naturally with top accounting software like Xero and QuickBooks, making reconciliation effortless.