Small Business Accounting 101: Understanding the Basics

As a small business owner in North Lakes, accounting is an essential part of managing your finances. However, if you are new to business, accounting can seem overwhelming and confusing. In this blog post, we will provide you with a guide on small business accounting 101, including the basics you need to know to manage your finances effectively.

What is Accounting?

Accounting is the process of recording, summarizing, analysing, and reporting financial transactions. The primary goal of accounting is to provide accurate and timely financial information that can be used for decision-making purposes. Accounting involves recording all financial transactions of a business, including sales, expenses, assets, liabilities, and equity. In Australia, all businesses must comply with the Australian Accounting Standards, which provide a set of guidelines for financial reporting.

Understanding Financial Statements

Financial statements are the primary output of the accounting process. They provide a summary of the financial performance and position of a business. The three main financial statements are the income statement, balance sheet, and cash flow statement.

  • Income Statement: The income statement shows the revenues earned and the expenses incurred by a business over a specific period, typically a month or a year. The income statement provides a summary of the profitability of a business.
  • Balance Sheet: The balance sheet shows the assets, liabilities, and equity of a business at a specific point in time. The balance sheet provides a summary of the financial position of a business.
  • Cash Flow Statement: The cash flow statement shows the cash inflows and outflows of a business over a specific period. The cash flow statement provides a summary of the cash position of a business.

Bookkeeping is the process of recording financial transactions. It involves maintaining accurate records of all financial transactions, including sales, expenses, assets, liabilities, and equity. Bookkeeping is essential to ensure that financial statements are accurate and reliable.

The key aspects of bookkeeping include:

  • Recording financial transactions: All financial transactions must be recorded accurately and in a timely manner.
  • Reconciling accounts: Reconciling accounts involves comparing the records of financial transactions to ensure that they match.
  • Managing accounts receivable and accounts payable: Accounts receivable and accounts payable refer to the money owed to and by the business, respectively. It is essential to manage these accounts effectively to ensure that the business has sufficient cash flow.
  • Payroll management: Payroll management involves calculating and paying wages to employees, including calculating taxes and other deductions.


In Australia, all businesses must comply with taxation laws. The Australian Taxation Office (ATO) is responsible for administering tax laws, including income tax, goods and services tax (GST), and fringe benefits tax (FBT).

It is essential to understand the tax laws and comply with them to avoid penalties and fines. Some of the key aspects of taxation that small business owners need to understand include:

  • Income tax: All businesses must pay income tax on their profits.
  • Goods and Services Tax (GST): Businesses with an annual turnover of $75,000 or more must register for GST and charge GST on their goods and services.
  • Fringe Benefits Tax (FBT): FBT is a tax on non-cash benefits provided to employees. Some common examples of fringe benefits include company cars, health insurance, and gym memberships.
  • Payroll taxes: Payroll taxes are taxes levied on wages paid to employees. In Australia, payroll taxes are levied by the state and territory governments.


In conclusion, understanding the basics of small business accounting is essential for the financial management of your business. It is important to maintain accurate records of all financial transactions, prepare financial statements regularly, and comply with taxation laws. At Total Business Partners, we offer a range of accounting services to help small business owners in North Lakes manage their finances effectively.

Our team of expert accountants can provide you with a comprehensive accounting solution tailored to your business needs. Whether you require bookkeeping, tax preparation, or financial planning services, we have the expertise and experience to help you achieve your financial goals.

By outsourcing your accounting needs to Total Business Partners, you can focus on running your business and leave the financial management to us. We will ensure that your financial records are accurate and up-to-date, and provide you with the insights you need to make informed decisions about your business.

If you’re looking for professional accounting services for your small business in North Lakes, contact Total Business Partners today. Let us help you take control of your finances and achieve long-term financial success.