Small Business Accounting Setup Tool

Small Business Accounting Setup Tool (USA)

This tool helps you think through fundamental accounting decisions for your small business in the U.S. Your choices impact how you track income and expenses, file taxes, and understand your business's financial health.

This is an informational tool to guide your thinking, not a substitute for professional accounting or tax advice.

Basics Accounting Method Chart of Accounts System Record Keeping

Business Basics

1. What is your business's legal structure (entity type)?

2. What type of business or industry are you in?

Consider if you sell products (inventory) or primarily provide services.

3. What is your estimated annual gross revenue?

Accounting Method (Tax Basis)

4. Which accounting method (tax basis) do you plan to use?

This determines when you recognize income and expenses for tax purposes. Note that certain businesses (especially with inventory or over $25M revenue) may be required to use the Accrual method.

Cash Basis Accrual Basis Unsure

5. Do you plan to track accounts receivable (money owed to you by customers)?

Yes No Unsure

6. Do you plan to track accounts payable (money you owe to vendors/suppliers)?

Yes No Unsure

Chart of Accounts

7. How detailed do you need your expense tracking to be?

A detailed Chart of Accounts allows for granular reporting (e.g., separating software expenses from office supplies). Simple means grouping expenses into broad categories.

Detailed (many specific expense accounts) Simple (broad expense categories) Unsure

8. Do you need to track inventory value as an asset?

Relevant if you sell products. This affects Cost of Goods Sold calculation.

Yes No (Service business or don't track inventory value) Unsure

Accounting System / Software

9. What type of system do you plan to use for your accounting?

10. Do you need integrated features like invoicing, payroll, or bank reconciliation?

Common features in accounting software.

Yes, need integrated features Some integrated features would be helpful No, will handle separately

Record Keeping

11. How do you plan to store your financial records (receipts, invoices, bank statements)?

Digitally (scanning, cloud storage) Physically (filing cabinets, binders) Mixed Digital and Physical

12. How often do you plan to review and update your accounting records?

Regularity is key for accuracy and timely reporting.

Daily Weekly Monthly Quarterly Annually (typically tax time only)

Small Business Accounting Setup Summary

This summary reflects your choices regarding your accounting setup and provides general considerations based on common practices.