Business Bookkeeping Services

Every business owner should be familiar with these key accounting principles that ensure your financial reports are accurate and compliant. 

Economic Entity Assumption – A business must be treated as a separate entity; personal and business finances cannot mix.

Reliability Assumption – Only transactions with verifiable documentation (receipts, invoices, statements) should be recorded.

Full Disclosure Principle – All relevant information affecting investors or lenders must be disclosed in financial statements or notes.

Conservatism Assumption – When uncertain, record potential losses but not potential gains.

Materiality Principle – Minor discrepancies that don’t affect accuracy may be disregarded (e.g., rounding).

Consistency Principle – Once an accounting method is adopted, it must be used consistently unless a better one improves reporting.

Monetary Unit Assumption – All financial records use one stable currency (e.g., USD), ignoring inflation.

Going Concern Assumption – Financial reporting assumes the business will continue operating unless evidence suggests otherwise. Additionally, maintaining a well-structured chart of accounts can aid in managing your bank reconciliation process effectively.

The Chart of Accounts (COA) serves as the cornerstone of your bookkeeping system — it acts like a map that clarifies where every transaction belongs. This structure is essential for effective bank reconciliation and producing accurate financial reports.

Assets: what your business owns (cash, bank accounts, equipment)

Liabilities: what your business owes (credit cards, loans)

Equity: your owner’s investment or retained earnings

Income: your business revenue and sales

Expenses: your operating costs (rent, utilities, software, etc.)

Every account type in bookkeeping has a normal balance — either a debit or a credit. Understanding this is crucial for tasks like bank reconciliation, as it helps you read financial reports and spot errors quickly.

Account Type                Normal Balance

Assets                           Debit

Liabilities                      Credit

Equity                            Credit

Revenue                        Credit

Expenses                      Debit

Quick Check: If you ever see an account with the opposite balance (for example, a negative asset), it may indicate a mistake or misclassification that needs fixing in your chart of accounts.

Financial reports transform your day-to-day bookkeeping into a compelling narrative about your business performance. These reports illustrate where your money comes from, where it goes, and provide insight into the overall health of your business. Incorporating effective bank reconciliation practices can enhance the accuracy of these reports.

1️⃣ Profit & Loss (Income Statement)

This report displays your business income, expenses, and net profit for a selected period. Use it to measure performance month-to-month and identify spending trends.

Key insights:

- Total income and cost of goods sold (COGS)

- Operating expenses

- Net profit or loss

Tip: Review this report monthly to determine if your revenue covers your costs and to plan for tax payments. Maintaining a well-organized chart of accounts can simplify this process.

2️⃣ Balance Sheet

The balance sheet provides a snapshot of what your business owns, owes, and its overall worth at a specific date.

Formula: ASSETS = LIABILITIES + EQUITY

Why it matters: It illustrates your financial position—whether your assets are growing, debts are manageable, and equity is building over time.

3️⃣ Cash Flow Statement

This statement tracks the movement of cash in and out of your business. Even profitable businesses can face challenges if cash flow is not effectively managed.

Sections include:

- Operating Activities (day-to-day cash inflows/outflows)

- Investing Activities (purchases or sales of equipment)

- Financing Activities (loans or owner withdrawals)

💡 Tip: Always ensure positive cash flow from operations; it keeps your business running smoothly.

🔍 What is Reconciliation? 

Bank reconciliation involves comparing your business bank and credit card statements with what’s recorded in your chart of accounts. It’s one of the most important bookkeeping tasks you should perform every month. 

The goal: your ending balances should match exactly. 

When you reconcile, you: 

- Confirm all deposits and expenses are recorded 

- Catch duplicate or missing transactions 

- Detect bank fees, interest, or fraud early 

- Ensure your financial reports (like Profit & Loss) are accurate 

💡 Tip: Always reconcile each account every month right after your bank statement closes.