#accounting-basics
Accounting Basics
Foundational accounting concepts, terminology, and principles for small business owners
Break-Even Analysis: How Many Units Must a Small Business Sell to Profit?
Break-even point in units equals total fixed costs divided by contribution margin per unit. This guide shows how to separate fixed and variable costs, compute contribution margin, find your break-even sales volume, and measure margin of safety.
How to Design a Chart of Accounts That Tells You Something
A bloated chart of accounts with 200 entries hides profit instead of revealing it. Most small businesses need 30 to 60 accounts, numbered in family blocks with gaps, with COGS separated from operating expenses and departments tracked as dimensions rather than duplicated accounts.
Designing a Chart of Accounts That Actually Tells You Something
A practical guide to designing a chart of accounts that produces useful financial statements — how to number accounts in increments of 10, when to use sub-accounts versus dimensions for locations and departments, and the year-end cleanup ritual that prevents bloat.
Section 461(h) Economic Performance and the Recurring Item Exception: When Accrual-Basis Liabilities Are Actually Deductible
Section 461(h) layers an economic performance test on top of the all-events test, so accrual-basis taxpayers cannot deduct a liability until the underlying activity actually happens. The recurring item exception accelerates deductions for predictable expenses when economic performance occurs within 8½ months of year-end and four specific conditions are met.
9 Common DIY Bookkeeping Mistakes That Cost Small Business Owners Thousands
Nine costly DIY bookkeeping mistakes—from mixing personal and business expenses to skipping year-end adjustments—with concrete fixes for each, so you can keep clean books without hiring a full-time accountant.
12 Common Bookkeeping Mistakes Small Businesses Make (And How to Fix Them)
Small businesses lose an average of $3,000 per year from bookkeeping errors. This guide covers the 12 most common mistakes—from mixing personal and business finances to misclassifying workers—with concrete fixes for each.
Depreciation: The Complete Guide for Small Business Owners
A practical guide to business asset depreciation covering MACRS, Section 179 (2026 limit $2,560,000), bonus depreciation restored to 100%, five depreciation methods, recapture rules, and the most common mistakes that cause small business owners to overpay taxes.
How to Keep Your Bookkeeping Up to Date (And Why It's Worth Every Minute)
Neglecting bookkeeping for a year costs $3,500–$8,000 in catch-up fees, plus a 30–50% CPA premium at tax time. Here's a practical system for staying current — daily, weekly, or monthly — and why real-time financial records are a business asset, not a chore.
How to Read Your Income Statement: A Complete Guide for Small Business Owners
Your income statement reveals whether your business model actually works—not just whether the bank balance is positive. Learn every line item from revenue to net income, how to calculate all three profit margins, and how to spot cost trends before they compound.
What Happens When You Don't Do Bookkeeping: The True Cost of Neglecting Your Finances
Skipping bookkeeping costs more than the time you save — missed deductions, IRS penalties, audit exposure, and blocked loan applications are predictable outcomes for small businesses that let financial records slip.
Common Bookkeeping Mistakes Small Business Owners Make (and How to Avoid Them)
Around 60% of small business owners feel they don't fully understand accounting. This guide covers 12 of the most common bookkeeping mistakes—mixing personal and business funds, skipping reconciliation, misclassifying workers—and shows exactly how to fix each one before it becomes costly.
Historical Bookkeeping: What It Is and Why Your Business Might Need It
Historical bookkeeping (catch-up bookkeeping) reconstructs unrecorded financial transactions from past periods. Learn when businesses need it, how IRS rules apply, and a step-by-step approach to getting your books current without losing deductions or facing penalties.