With our “Brunch Break Bookkeeping” series on Instagram, and the supplemental videos on YouTube, we aim to put bookkeeping back in the hands of the small business owner. Our series is targeted towards homesteaders, with the expectation of little to no previous experience. Because of this, many unrelated industry professionals will be able to benefit from the information provided within. If you are a homesteader with more technical or specific issues please contact us directly. 
Our Instagram is launched, and we hope to launch some longer form videos on YouTube in summer of 2023. With over a year of weekly content already planned it would be greatly appreciated if you would subscribe, so that once our videos come out, you’ll be able to watch them! Our initial videos will be very salt of the Earth – we are Homesteaders & Bookkeepers, not videography specialists, so we hope to grow with you!
Below is a selection of topics from our Brunch Break Bookkeeping series, hope they are helpful, and please feel free to reach out for more detailed information, or information tailored more specifically to your business!
When starting a business, one of the most critical decisions you’ll make is how to account for your company’s financial transactions. You can choose between cash accounting and accrual accounting. Although both methods track your company’s income and expenses, they differ in how they record the financial transactions.

Cash Accounting:

In cash accounting, revenue and expenses are recorded when cash is received or paid. This means that if you receive a payment from a customer, that revenue is recorded in your books immediately. Similarly, if you pay rent for the next month, you record the expense only when the payment is made.

This method is straightforward and easy to understand, making it the preferred method for small businesses. It’s also perfect for businesses dealing with cash transactions, like retail and hospitality industries. Moreover, cash accounting is inexpensive and uncomplicated because it doesn’t involve extensive record-keeping. Still, it has downsides. One major disadvantage is unreliable financial reporting because it doesn’t provide comprehensive information.

Another disadvantage of cash accounting is that it doesn’t consider non-cash transactions that can impact your business, such as outstanding invoices or payments owed to vendors. For instance, suppose a customer purchases a product on credit from your store. In that case, the revenue isn’t recorded until you receive the actual payment, which can delay financial reporting.

Accrual Accounting:

Accrual accounting is an accounting method that records revenue when it’s earned, and expenses when they’re incurred. This means that if you sell a product on credit, that revenue will be recorded as soon as the sale is made, even if you haven’t received the payment. Similarly, if you incur an expense, like your employees’ salaries, that expense will be recorded in your books even if it hasn’t been paid yet.

Unlike cash accounting, accrual accounting provides a clear picture of your business’s financial standing. It’s also preferable for businesses dealing with long-term contracts or transactions spanning different periods, such as project-based industries.

However, since it considers all financial transactions, accrual accounting can be more difficult and expensive to maintain because it requires more extensive record-keeping. Moreover, it doesn’t provide an accurate picture of your company’s cash flow because it doesn’t record when the cash actually exchanged hands.

Still, even though accrual accounting is challenging to understand, it’s worth noting that the report accurately reflects your company’s actual position by recognizing all financial transactions as they occur. Understanding these accounting methods will help you make informed decisions about how to record transactions that accurately reflect your company’s financial position.
Double entry bookkeeping is a popular system of accounting that has been used for centuries. It’s essential for businesses to track their finances accurately and ensure that their records comply with generally accepted accounting principles (GAAP).
In double entry bookkeeping, every transaction is recorded in two different accounts – a debit account and a credit account. A debit entry is made in one account, and a corresponding credit entry is made in another. Each account can have several entries, and every entry is associated with an amount, which reflects the financial impact of the transaction.

For example, when a business receives a payment from a customer, the transaction will be recorded as a debit in the cash or bank account and a credit in the sales account. Similarly, when a business purchases a new piece of equipment, the transaction will be recorded as a debit in the equipment account and a credit in the cash or bank account.

Double entry bookkeeping offers several benefits to businesses, including accuracy, efficiency, and compliance.

Today, businesses can use accounting software to automate repetitive tasks and streamline their financial transactions. This software makes the double-entry bookkeeping system more efficient and helps businesses save time and money.

Double entry bookkeeping is a fundamental system of accounting that is necessary for any business to track their finances correctly. It provides companies with accurate financial reports and insights into their financial health. By adopting a double entry bookkeeping system, businesses can maintain comprehensive financial records, make informed decisions, and stay compliant with generally accepted accounting principles.
Accounting software is a program that assists in keeping an accurate record of financial transactions. It automates repetitive tasks like billing, invoicing, and expense tracking, making the accounting process more efficient. With this software, businesses can keep track of their financial data in real-time, analyze financial statements, and make informed decisions.

Accounting software works by integrating with various financial data sources to automate the accounting process. The software can link to bank accounts, credit card accounts, and other financial sources. When a business transaction happens in any of these sources, the accounting software automatically records it. It then categorizes these transactions, creates reports, generates invoices, and reconciles accounts.

There are many different types of accounting software available, each with its own features and functionality. Here are the two most common types for small business owners:

1. Cloud-based Accounting Software
Cloud-based accounting software is accessed through the internet and operates on a subscription basis. Users can access the software from any device with an internet connection. This type of accounting software is ideal for small businesses, as it reduces the workload of managing IT infrastructure.

2. Desktop Accounting Software
Desktop accounting software is installed on a computer, and all data is stored locally. This type of software offers better security, as users have complete control over their data. Desktop accounting software is suitable for larger businesses with dedicated IT personnel.

Common features of accounting software:

1. Invoicing and Billing
2. Expense Tracking
3. Financial Reporting
4. Payroll Management

And here are some benefits of using accounting software:

1. Increased Accuracy
2. Improved Efficiency
3. Cost Savings
4. Better Decision Making

Accounting software is a valuable tool that can help businesses manage their financial processes more efficiently. With the different types of accounting software available, it’s important to select the one that’s best suited to your business’s needs. With the right accounting software in place, businesses can save time, money, and make better-informed decisions!
Bill Payment Clearing accounts used in a way that is very similar to the Bank Clearing account we talked about in the last Brunch Break Bookkeeping, but for your bills, not money you receive. In fact, you can just use the Bank Clearing account for both purposes, but I find it’s a little cleaner, and easier to understand (or troubleshoot) when they are separated.

Sometimes this account will be used when cash is withdrawn, and used to pay multiple bills, and sometimes it will be used to pay multiple bills from the same vendor. There are other times you could use this account too, but I would say these are the most common.

It’s not as easy to say which accounts should be debited and credited for Bill Payment Clearing, because it depends on where you money came from, and went to.

Generally, it’s going to look something like this:

Cash on Hand/Bill Payment Clearing -> Bill Payment Clearing/Bills from vendors A/B/C


Bank Account/Bill Payment Clearing -> Bill Payment Clearing/Bills A/B/C

Remember – Your Cash on Hand or Till accounts are NOT your Bank Account, they should match your cash register or cash box.
The bank clearing account can be used for many reasons, but one of the most common is if you have an amount of money that is split before or after it reaches your actual bank account.

For example, maybe one of your clients had a few outstanding invoices for $10, $20, $30, and $40, and they’ve given you all of the money ($100) at once.

Well, you have to show the $100 as the bank deposit, because that is the truth of what showed up on your bank statement. That $100 is double entered as Bank/Bank Clearing, so that your accounting will show a $100 (debit) increase to the bank, and a $100 (credit) loss from Bank Clearing.

Then, you do another double entry of Bank Clearing/Customer Payment for each of the smaller sums, ($10, $20, $30, $40) Which will show a payment (credit) to your customer’s invoices, and a payment (debit) to Bank Clearing, offsetting the $100 entry made earlier.

Et Voila! Now you’ll have a much simpler time reconciling your bank account, because it will match your bank statement exactly! We will talk about reconciling in another post if you aren’t sure what that means then be sure to follow to catch the next tips!!
 Bank reconciliation is a process of comparing and verifying the transactions recorded in a company’s bank statement with its own records of cash transactions. The purpose of bank reconciliation is to identify any discrepancies or errors between the two records and to make any necessary adjustments or corrections.

Why is bank reconciliation important? Bank reconciliation is important for several reasons. First, it helps ensure the accuracy and completeness of financial records. By comparing the bank statement with the company’s own records, the company can identify any errors, omissions or discrepancies and make the necessary corrections.

Second, bank reconciliation is a vital tool for detecting any fraudulent or unauthorized transactions. If someone has unauthorized access to the company’s bank account and is making unauthorized transactions, bank reconciliation can uncover these transactions and help prevent further losses.

Third, bank reconciliation can also provide valuable insights into the company’s cash flow and financial health. By comparing the bank statement with its own records, the company can identify any patterns or trends in cash inflows and outflows that may indicate cash flow problems or opportunities for improvement.

So, how does bank reconciliation work? The process of bank reconciliation typically involves the following steps:

Step 1: Gather the bank statement and the company’s own records of cash transactions, such as the cash book or general ledger.

Step 2: Compare the two records, transaction by transaction, and identify any discrepancies or errors.

Step 3: Reconcile the two records by making any necessary adjustments or corrections. For example, if there is a discrepancy in the amount of a deposit, the company may need to adjust its own records to match the amount shown on the bank statement.

Step 4: Record any adjustments or corrections in the company’s books.

Step 5: Repeat the process regularly, such as monthly or quarterly, to ensure the ongoing accuracy and completeness of financial records.

In conclusion, bank reconciliation is a critical process for ensuring the accuracy and completeness of financial records, detecting any fraudulent or unauthorized transactions, and gaining insights into the company’s cash flow and financial health. By following the steps outlined in this discussion, companies can ensure that their financial records are accurate, up-to-date, and reliable.
Sometimes people get really bent out of shape about what to name their accounts, and although it’s true there should be some guidelines (Boaty McBoatface would not make a great account name) the truth of the matter is that within reason, just do what makes you most comfortable.

If naming each bank account it’s literal account number is how your brain works – do that! If there are three business chequing accounts, but you use one of them as a savings account, and one of them is used to pay bills, then name them after their FUNCTION, not their TYPE.

Expenses work the same way, if it makes most sense for your supplies to all be grouped together, then just keep one “Supplies” account. If, however, it makes sense to separate them on paper so you can analyze them better, then break it down however makes most sense. Do you want to record how much you spend on feed compared to water management? Make separate expense accounts to track those things.

Overall you want to keep things as streamlined as possible, and there are other ways to differentiate transactions – so don’t go creating a bunch of subdivisions in your accounts if you don’t need them – but also keep in mind that you can’t report on anything if you didn’t keep it separate – so there is a happy medium with this!
We’ve got some exciting things happening around here! Bookkeeping is our “real job”, and I truly believe that no matter your primary business, every owner should have a way to analyze how they are doing! That method of analysis, essentially, is bookkeeping.
So – we’re launching a weekly tips post for bookkeeping, and hope in time to provide a supplementary video on our YouTube channel to go along with them! Right now our videography skills are severely lacking, but we are currently learning to screen record and add audio so that we can show you guys how easy it is to find where your money is all going!!!!!
Hope this is a helpful series to you guys!